What your result means
The break-even month is when your cumulative monthly savings first exceed what you paid to get the new loan. Before that month, you are still behind on the deal even though your payment is lower; after it, every additional month you keep the loan is money in your pocket that the old loan would not have given you. Because a second home is not somewhere most owners plan to live forever, this calculator also asks how many years you expect to actually keep the loan, and compares total dollars paid both ways over that specific window, plus what you would still owe on each loan at the end of it, rather than only quoting a monthly saving that can look good even when the underlying deal is not. Comparing payments alone can be misleading on its own: resetting to a longer term often lowers the monthly payment while leaving more of the balance unpaid at the end of your stay, so the net saving figure below nets that out too.
If your break-even month is longer than the years you plan to keep the loan, refinancing at the terms you entered would cost you more overall than staying put, even though the monthly payment looks smaller. That is the single most common way a "lower rate" refinance quietly loses money on a second home that gets sold, gifted or paid off earlier than a primary residence typically would be.
Worked example
An owner of a lake house in Michigan has $350,000 left on a loan at 6.5% with 25 years remaining. A lender offers 5.5% on a new 30-year loan, with $6,000 in closing costs and one point ($3,500 on this balance), for a total upfront cost of $9,500. The current payment is roughly $2,363 a month; the new payment is roughly $1,987, a saving of about $376 a month. Dividing $9,500 by $376 gives a break-even of about 26 months, a little over two years. But resetting to a fresh 30-year term means the new loan pays down principal more slowly: over 10 years, the owner pays $283,587 on the current loan and still owes $271,290 on it, versus paying $247,971 (including the upfront fees) and still owing $288,893 on the new loan. Counting both what is paid and what is still owed, keeping the current loan costs an estimated $554,877 in total over those 10 years against $536,865 for the new loan, a net saving of roughly $18,012, smaller than a payments-only comparison suggests because the new loan leaves a larger balance outstanding. These figures are illustrative and depend on the exact rate, fees and timeline a real lender offers.
How this is calculated
Points cost = new balance x points / 100
Total paid over your stay = monthly payment x months stayed, plus upfront costs on the new loan
Net saving over your stay = (old total paid + old balance remaining) - (new total paid + new balance remaining)
Both payments are calculated as standard US monthly-compounding principal-and-interest amortization at each loan's own rate and term, which is why changing the term (not just the rate) changes the monthly saving even on the same balance. The net saving figure counts what is still owed at the end of your stay as well as what you paid along the way, because the two loans pay down principal at different speeds: a new loan reset to a longer term, in particular, can look cheaper month to month while leaving you owing more when you sell, gift or pay it off. Comparing payments alone without the remaining balances overstates the saving whenever that happens.
| Cost | Typical range | Notes |
|---|---|---|
| Closing costs | About 2% to 6% of the new loan amount | Varies by lender, state, loan size and whether an appraisal is required; not a fixed CFPB figure |
| HELOC or home equity loan costs | About 2% to 5% of the credit line | An alternative to a full refinance when you only need to raise cash |
| Second-home HELOC ceiling | Roughly 75% to 85% combined loan-to-value, lender-set | Tighter than the 80% to 90% typical on a primary residence; not a regulatory cap |
What this calculator does not cover
This tool estimates principal and interest only; it does not model property tax or insurance escrow changes, private mortgage insurance, or the mortgage interest deduction, which is capped at $750,000 of combined acquisition debt across a primary and second home. The remaining-balance figures assume you pay exactly the scheduled payment on each loan with no extra principal payments; paying down either loan faster than scheduled would change both balances and the net saving. It does not check the pricing adjustments (LLPAs) that Fannie Mae and Freddie Mac apply to second homes, since that table changes and is not independently verified here; treat any rate quote you get as the one that matters, not this tool's default. It also does not model a cash-out refinance or a HELOC as an alternative to a rate-and-term refinance, both of which have their own cost structure. If you have not bought the property yet, the affordability calculator and our buying a vacation home guide come first.
Questions
Why does the break-even change if I change the new loan's term?
Because the monthly payment depends on both the rate and the number of years over which it is amortized. Resetting a loan back to a full 30-year term after you have already paid down several years of a shorter one usually lowers the payment more than the rate change alone would, which can make the break-even look shorter even though you are extending how long you owe.
Should I count points as part of the cost?
Yes. Points are prepaid interest that lower your rate, and they are a real upfront cost like any other closing fee, so they belong in the break-even calculation alongside the rest of your closing costs.
Is a HELOC cheaper than a full refinance?
It depends on how much you need and why. A HELOC generally has lower closing costs and leaves your first mortgage rate untouched, but it carries its own rate, usually variable, and a tighter loan-to-value ceiling on a second home than on a primary residence.
Does this account for the SALT deduction or mortgage interest deduction?
No. This calculator only compares principal and interest paid under each loan; it does not model any tax deduction, since those depend on your full return and change with tax law.
What if my new rate is not actually lower?
If your monthly saving is zero or negative, the calculator will tell you that refinancing at the terms you entered would not reduce your monthly cost, and a break-even month cannot be calculated.
Last reviewed 15 September 2026 against CFPB consumer guidance on refinancing and HELOCs. Next review January 2027.
This calculator gives a general estimate from the figures you enter. It is not financial, tax, legal or mortgage advice. Rules change and personal circumstances matter, so confirm with a qualified professional before you act. See the full disclaimer.