When should I refinance my mortgage?

Refinance when rates drop 0.75-1% below your current rate, or when you want to switch loan types (ARM to fixed). The key factors are: (1) Break-even point - you should plan to stay in your home at least 2-3 years beyond break-even to make it worthwhile, (2) Closing costs - typically 2-5% of loan amount ($5,000-15,000), (3) Current loan progress - if you're 20+ years into a 30-year mortgage, restarting may not make sense, (4) Loan term - refinancing to a shorter term (30 to 15 years) saves massive interest but increases monthly payment, and (5) Credit score improvements - better credit can qualify you for lower rates. Use our calculator to see your exact break-even point and lifetime savings.

What is break-even and why does it matter?

Break-even is the point where your cumulative monthly savings equal your upfront refinancing costs. Before break-even, you're recovering costs. After break-even, you're saving money. Example: If closing costs are $6,000 and you save $200/month, break-even is 30 months (2.5 years). If you plan to move in 2 years, you won't reach break-even and refinancing loses money. Rule of thumb: Break-even under 3 years = excellent, 3-5 years = good, over 5 years = questionable. Your break-even depends on closing costs, rate reduction, and loan size. Higher loan amounts have shorter break-even because the same rate reduction saves more per month.

How much does it cost to refinance a mortgage?

Refinancing typically costs 2-5% of your loan amount in closing costs. On a $300,000 mortgage, expect $6,000-15,000 in fees including: (1) Appraisal fee: $400-600, (2) Origination/application fee: 0.5-1% of loan ($1,500-3,000), (3) Title search and insurance: $700-900, (4) Credit report: $25-50, (5) Recording fees: $125-250, (6) Underwriting fee: $300-500. Some lenders offer 'no-cost refinance' where they cover closing costs but charge a higher interest rate. You can also roll closing costs into your new loan, increasing your principal but preserving cash. Our calculator shows break-even for both scenarios. Always get Loan Estimates from 3-5 lenders and negotiate fees - many are flexible.

Should I refinance to a 15-year or 30-year mortgage?

15-year mortgages have higher monthly payments but save massive interest and build equity faster. 30-year mortgages offer lower payments and more flexibility. Example on $300,000 at 6.5%: 15-year = $2,613/month, total interest $170,340. 30-year = $1,896/month, total interest $382,633. The 15-year saves $212,293 in interest but costs $717/month more. Choose 15-year if: steady income, can afford higher payment, want to own home outright sooner, or nearing retirement. Choose 30-year if: need lower payment flexibility, want to invest difference (potential higher returns), have other financial goals, or income is variable. You can also refinance to 30-year but make extra principal payments for best of both worlds.

Mortgage Refinance Calculator

See if refinancing makes sense with break-even analysis and lifetime savings

Current Mortgage

Current Balance

Current Rate

Years Remaining

Current Monthly Payment

New Loan Details

New Rate

New Term (Years)

Closing Costs

Typically 2-5% of loan amount

Roll closing costs into new loan

Points to Buy Down Rate

Each point = 1% of loan, typically lowers rate ~0.25%

Maybe Wait

Break-even takes too long or negative savings

Key Metrics

Monthly Savings

0y 0m

Break-Even Time

New Payment

New Rate

Lifetime Savings$0

Total Upfront Cost$5,000

Loan Comparison

Cost Breakdown

Monthly Payment

Term

30y

Rate

6.00%