Refinancing
Refinancing replaces your existing mortgage with a new one, usually to get a lower interest rate, change the term, or tap equity. It's worth it when the monthly savings outlast the closing costs — and when the deal still saves money over the full life of the loan, not just per month.
The break-even test — closing costs divided by monthly saving — is necessary and not sufficient, because it measures how fast you recover the fees and says nothing about what you signed up for afterwards. Take a $300,000 balance at 7.25% with 25 years left, refinanced at 6.25% with $6,000 of costs. Into a fresh 30-year term it saves $321 a month and breaks even in 19 months, while costing about $14,400 more in total interest than never refinancing. Into a matched 25-year term it saves only $189 a month, breaks even in 32 months, and saves about $56,800 overall. The worse-looking option is the better one.
Put it to work
Mortgage Refinance Calculator
Should you refinance? Compare payments, find your break-even month on closing costs, and see the honest lifetime cost — including the term-reset trap.
Mortgage Calculator
Estimate your monthly mortgage payment with taxes, insurance, PMI and HOA — plus total interest and a full amortization breakdown. Free, fast, no signup.