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A lower rate is not automatically a win. Closing costs, points, and how long you keep the loan decide whether a refinance pays for itself. This page is rate-and-term — replace the first lien on purpose. Pulling cash while you still like the coupon is HELOC vs cash-out.
Updated 2026-09-13 · 10 min · Educational, not lending or tax advice. Run the refinance break-even calculator with a payoff letter and a written Loan Estimate. Defaults are examples, not today’s lock.
Break-even months = economic closing costs ÷ monthly principal-and-interest savings. If you will sell, recast, or move before that month, keep the current loan unless cash-flow or a shorter term is the real goal.
Worked slice
P&I $2,159 → $1,977. Save $183/mo. $6,500 cash recoups in 35.6 months. Lifetime interest $379,664 → $320,490. Stay 7 years: interest saved $20,076, remaining $278,162 vs $282,896, net of costs about $13,576.
The usual “no”
Same quote, new 30-year term: P&I $1,898, recoup 24.9 months. Then at year 7 you owe $286,331 vs $282,896 if you kept the loan. Payment drop was a stretch. Match remaining term unless the leftover cash-flow is the product.
| Item | Figure | What it is |
|---|---|---|
| Freddie Mac PMMS 30-year | 6.76% | Week of Sep 10, 2026. Average of applications, not your lock. |
| PMMS 15-year | 6.09% | Same week. Still an average. |
| Qualified residence cap | $750,000 | Post-Dec 15, 2017 acquisition debt (Pub. 936). $375,000 MFS. |
| 2026 standard deduction | $16,100 / $32,200 | Rev. Proc. 2025-32. Most people do not itemize the interest. |
Type the coupon on the payoff letter and the rate on the Loan Estimate. This classroom does not pull a live lender feed into the page as if it were frozen. Last week’s 6.71% (Sep 3) is already stale; this week’s 6.76% will be too.
On a $400,000 leftover, 0.5% is real money. On a $90,000 leftover, $6,500 of title work can take ~127 months to recoup on a 0.90-point cut. Balance size beats the headline. Lender credits that raise the rate can still make sense if you are moving in two years and refuse to write a closing check.
A 0.5-point drop on the worked $320,000 / 27-year leftover (6.80% → 6.30%) saves about $102 a month. Same $6,500 then takes 63.5 months. If you might list the house in year three, that is a no.
Rolling $6,500 into the new loan on the match-term slice raises the new P&I from $1,977 to $2,017. Monthly save shrinks to $142. Recoup stretches to 45.6 months, and you pay interest on the fees. The check you did not write is not free.
If you are pulling cash to kill 22% cards, the comparison is the card APR, not the mortgage rate you already have. If you are pulling cash to buy a boat, treat the new interest as a lifestyle cost. If the first lien is still 3%, rewriting it at a 2026 PMMS-class rate to extract a kitchen is how people light a cheap loan. That file is HELOC vs cash-out.
A discount point is 1% of the new loan. Add it to economic cost. Use the coupon the point actually buys — do not invent a 0.25-off-per-point rule. A lender credit is the opposite: lower cash today, higher coupon. The calculator’s stay-horizon net is payment savings minus costs plus the remaining-balance delta if you sell and pay off. That last term is why a 30-year reset can “win” the monthly and lose the sale.
Itemizing qualified residence interest is a maybe, not a haircut you should bake into the rate. 2026 standard deduction is $16,100 single / $32,200 MFJ. After SALT, many W-2 households never itemize. After-tax coupon math lives in the extra vs investing playbook.
Free tool
Match-term vs reset, cash vs rolled, points, stay horizon, hash + /chart.js, shareable URL. Rates are yours.
The other housing tool
Keep the cheap first lien vs replace it. Do not run that decision through this break-even.
Economic costs ÷ monthly P&I savings. $6,500 / $183 ≈ 35.6 months on the match-term slice.
On $320k / 27 years, 6.80% → 6.30% saves ~$102 and recoups $6,500 in 63.5 months. Balance size matters more than the headline cut.
Count them anyway. Rolling $6,500 on this slice stretches recoup from 35.6 to 45.6 months.
This page replaces the first lien without pulling cash. Cash and a cheap first lien: HELOC vs cash-out.
It can fake a faster recoup and leave more debt at sale. Match remaining term unless cash-flow is the product.
Only if you keep the loan past the extra months of recoup. Type the rate the point buys.
No. Escrow recasts are not a rate win. Compare P&I.
If recoup is longer than the stay, keep the loan or take a credit so cash at closing is near zero.
Educational only. Confirm the Loan Estimate, payoff letter, Publication 936, and a licensed professional. Written by Thomas Sanders.