When should I refinance my mortgage?

Refinancing makes financial sense when the interest rate savings outweigh the closing costs before you plan to move. A common rule of thumb is the 'break-even rule' — divide your closing costs by your monthly savings to find how many months until you recoup the costs. If you plan to stay longer than the break-even period, refinancing is likely worthwhile.

How much can I save by refinancing?

Savings depend on the rate difference, remaining loan balance, and how long you stay in the home. On a $300,000 loan, dropping from 7.5% to 6.5% saves about $200/month in P&I. Over 10 years, that's $24,000 — minus closing costs of roughly $6,000–$9,000, for a net savings of $15,000–$18,000.

What are typical refinance closing costs?

Refinance closing costs typically range from 2%–5% of the loan amount. Common costs include origination fees (0.5%–1%), appraisal ($400–$700), title insurance ($500–$2,000), and recording fees. Some lenders offer 'no-closing-cost' refinances where costs are rolled into the rate or loan balance.

Does refinancing reset my mortgage term?

Yes, unless you refinance into the same remaining term. If you have 22 years left and refinance into a new 30-year loan, you're adding 8 years back. To avoid this, consider refinancing into a 15 or 20-year loan, or making extra payments on the new loan to maintain your original payoff timeline.

Refinance Calculator

📄 Current Loan

Current Balance $280,000

Current Rate 7.50%

Remaining Term 25 yrs

🔄 New Loan

New Rate 6.81%

New Loan Term

Closing Costs $6,000

📊 Refinance Results

Current Payment

$—

per month

New Payment

$—

per month

Monthly Savings

$—

—

Break-Even Point

$—

Lifetime Interest Savings

Savings Comparison

Period	Current Loan Total	New Loan Total	Net Savings
5 Years	$—	$—	$—
10 Years	$—	$—	$—
Lifetime	$—	$—	$—

Enter your loan details above to see a refinance recommendation.

Frequently Asked Questions

Refinancing makes sense when the rate savings outweigh your closing costs before you plan to move. The break-even rule: divide closing costs by monthly savings to find when you recoup costs. If you plan to stay longer than that, refinancing is likely worthwhile. Other reasons to refinance include shortening your term, removing PMI, or switching from an ARM to a fixed rate.

Savings depend on the rate difference, remaining balance, and how long you stay. On a $300,000 balance, dropping from 7.5% to 6.5% saves about $195/month in P&I. After $6,000 in closing costs, the break-even is about 31 months. Over 10 years, net savings would be approximately $17,000 after closing costs.

Refinance closing costs typically run 2%–5% of the loan amount. Key costs include origination/lender fees (0.5%–1%), title insurance ($500–$2,000), appraisal ($400–$700), credit report ($25–$50), and recording fees ($50–$500). Some lenders offer no-closing-cost refinances where you accept a slightly higher rate in exchange for no upfront costs.

Yes, if you refinance into a new 30-year loan, your term resets regardless of how many years you've already paid. If you have 22 years left and refinance into a 30-year, you're adding 8 years to your loan. To avoid this, consider refinancing into a 15 or 20-year loan, or matching the term to your remaining balance and making extra payments to stay on schedule.

Disclaimer: Rates shown are for illustrative purposes only. Actual refinance rates and closing costs will vary by lender, credit profile, and market conditions. Consult a licensed mortgage professional before making refinancing decisions.

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Frequently Asked Questions

When should I refinance my mortgage?

How much can I save by refinancing?

What are typical refinance closing costs?

Does refinancing reset my loan term?

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