Net savings from refinancing, over time
Below zero, refinancing is still behind because of its upfront costs. The line crossing zero is your true break-even.
What tips the balance
Where the money goes
Total cost is what you pay plus what you would still owe. The difference between the columns is your saving.
How it's calculated
Total cost while you keep the loan is the upfront costs, plus every monthly payment, plus the balance you would still owe when you sell or refinance again. Counting the remaining balance matters. Without it, a refinance into a new 30-year loan looks better than it is, because more of each payment goes to interest.
The simple break-even divides closing costs by the monthly payment saving, which is the number lenders usually quote. The true break-even is the first month from which your total cost stays lower with the refinance. If you add the costs to the new loan, nothing is paid upfront, but you pay interest on them.
Not included: the mortgage interest deduction, escrow changes, prepayment penalties and cash-out amounts. Points are a percent of your current balance.