Should You Refinance in 2026? Break-Even Calculator & Real Scenarios
Current 30-yr rate: 6.85%. Refinancing makes sense if you can drop 0.75%+ and your break-even is under 36 months. We ran the numbers for 3 real scenarios.
Current 30-yr Rate
6.85%
Min Rate Drop
0.75%
Avg Break-Even
32 months
The Refinance Break-Even Formula (Simple)
Break-Even (months) = Total Closing Costs ÷ Monthly Savings
Example: $8,000 closing costs ÷ $200/month savings = 40 months (3.3 years)
Step 1: Calculate Monthly Savings
New payment − Old payment = Monthly savings. Example: $2,200 − $2,447 = $247/month saved.
Step 2: Estimate Closing Costs
Avg 2-3% of loan balance. On $350K loan: $7,000–$10,500. Get a Loan Estimate from 3 lenders.
Step 3: Divide
Closing costs ÷ Monthly savings = Break-even in months. If you stay longer, you profit.
3 Real Refinance Scenarios for 2026
Scenario 1: Great Candidate to Refinance
Current Loan
New Refinanced Loan
Break-Even Point
37 months
Total Lifetime Savings
$43,740
Verdict: REFINANCE NOW
Saving $235/month with a 37-month break-even. If you plan to stay 5+ years, this saves $43,740 over the remaining loan term.
Scenario 2: Borderline — Depends on Plans
Current Loan
New Refinanced Loan
Break-Even Point
61 months
Total Lifetime Savings
$18,900
Verdict: MAYBE — STAY 5+ YEARS
Break-even is 61 months (5.1 years). Only worth it if you plan to stay at least 6 years. If you might move in 3-4 years, skip it.
Scenario 3: Not Worth Refinancing
Current Loan
New Refinanced Loan
Break-Even Point
76 months
Total Lifetime Savings
$9,200
Verdict: SKIP IT
Only saving $92/month with a 76-month (6.3 year) break-even. The rate drop is too small. Wait for rates to fall further.
Get Your Personalized Refinance Quote
Compare rates from 10+ lenders in 2 minutes. No SSN required to see rates.
When NOT to Refinance in 2026
You're moving within 3 years
If your break-even is 36 months and you move in 24 months, you lose money. Calculate your specific break-even first.
Your rate drop is less than 0.5%
On most loan balances, a 0.5% rate drop barely covers closing costs. You need 0.75%+ to make it worthwhile.
You're near the end of your loan
In the final 5-7 years of a 30-year mortgage, most of your payment is principal. Refinancing resets the amortization schedule and costs you more in interest long-term.
Your credit score dropped significantly
If your credit score fell since your original loan, you may not qualify for a better rate. Fix your credit first, then refinance.
You're extending your loan term
Refinancing from a 25-year remaining term into a new 30-year loan lowers your payment but costs more total interest. Consider a 20 or 25-year term instead.
Refinance Closing Costs Breakdown 2026
| Cost Item | Typical Range | Negotiable? |
|---|---|---|
| Origination Fee | $1,000–$3,000 | Yes — shop lenders |
| Appraisal Fee | $500–$700 | Sometimes waived |
| Title Insurance | $1,000–$2,000 | Yes — shop title companies |
| Recording Fees | $100–$500 | No — government fee |
| Prepaid Interest | $500–$2,000 | No — depends on close date |
| Escrow Setup | $500–$2,000 | No — required by lender |
| Credit Report | $25–$75 | No |
| TOTAL | $3,625–$10,275 | Avg: 2–3% of loan |
💡 Pro tip: Ask about no-closing-cost refinances. The lender covers costs in exchange for a rate 0.25–0.50% higher. Best if you plan to refinance again within 3 years.
Frequently Asked Questions
Is it worth refinancing in 2026?
How do I calculate my refinance break-even point?
What is the minimum rate drop to make refinancing worth it?
What are typical refinance closing costs in 2026?
Related Guides
Ready to Refinance? Compare Rates Now
Get personalized refinance quotes from 10+ lenders. Takes 2 minutes, no SSN required.
Get Refinance Quotes →Free · No SSN required · Compare 10+ lenders
David Rodriguez
Refinance & Rate Specialist · NMLS #234567
David has 11+ years specializing in mortgage refinancing strategy. He has helped over 800 homeowners calculate their break-even and make the right refinancing decision.