Refinancing replaces your mortgage with a new one. It can lower your payment or total interest, but it has upfront costs, so the math matters.
The break-even
- Get the total closing costs from a Loan Estimate
- Find the monthly saving compared with your current payment
- Divide closing costs by monthly saving: that's how many months to break even
- If you'll move or refinance again before then, it may not be worth it
Watch for
- A longer term that lowers the payment but raises total interest
- Closing costs rolled into the loan
- Cash-out refinancing, which increases what you owe against the home
General education, not financial advice. Compare Loan Estimates from several lenders and ask a HUD-approved housing counselor if unsure. Better Home Budget isn't paid by any lender, insurer or contractor.