Financial glossary
Break-Even Point
In plain English
The time or output level at which cumulative benefits equal upfront costs, after which a decision begins producing net savings.
Break-even point
A break-even point is when accumulated benefits equal the upfront cost of a decision. Before break-even, the choice has produced a net cost; after break-even, continued savings may create a net benefit.
For mortgage points, divide the upfront point cost by monthly payment savings. For refinancing, divide closing costs by monthly savings. These simple versions do not automatically include taxes, investment opportunity cost, changes in loan balance, or a future refinance.
The mortgage points calculator and refinance calculator show their assumptions so you can compare break-even with the time you realistically expect to keep the loan.
Related calculators
- Mortgage Points CalculatorCompare mortgage payments with and without discount points, calculate the break-even month, and test net savings for the time you expect to keep the loan.
- Refinance CalculatorSee if refinancing pays off: new payment, monthly savings, break-even point on closing costs, and lifetime interest compared with your current loan.
- Rent vs. Buy CalculatorCompare renting and buying with mortgage, PMI, HOA, equity, appreciation, rent growth, selling costs, and invested cash.