When to Refinance
Refinancing can make sense when the monthly savings, total interest savings, or loan structure improvement outweigh the closing costs and hassle.
The break-even point is one of the simplest tests. Divide refinance costs by monthly savings to estimate how many months it takes to recover the cost.
Be careful with term resets. A lower payment can still increase lifetime interest if you restart a long term after years of payments on the original loan.
Key takeaways
- Use calculators to compare scenarios, not to replace lender disclosures or professional advice.
- Small changes in rate, fees, and term can create large lifetime cost differences.
- Look at both monthly affordability and total cost before making a decision.