GLOSSARY · DEBT & HOUSING
Refinance break-even point
The number of months until the lower payment from a new loan has repaid the closing costs of getting it. Refinancing saves money only if you keep the new loan longer than that. Comparing monthly payments alone can mislead, because restarting a long term can raise the total interest paid even at a lower rate.
Also called: refinancing break-even, mortgage refinance payback
FORMULA
Break-even months = closing costs ÷ monthly payment saved
COMPUTE IT WITH YOUR NUMBERS
LEARN IT PROPERLY
CHAPTER · EXPENSE REDUCTION & COST AUDITING · STRATEGIESLowering Your Housing CostsCHAPTER · DEBT ELIMINATION STRATEGIES · STRATEGIESRefinancing a MortgageRELATED TERMS
SOURCES
- Owning a Home. Consumer Financial Protection Bureau.