Question 1

What is the refinance break-even point?

Accepted Answer

It is the number of months it takes for your monthly savings to repay the closing costs. Divide closing costs by monthly savings. If you will keep the loan longer than that, the refinance saves money.

Question 2

How low should a rate be to justify refinancing?

Accepted Answer

The old rule of a full 1% drop is outdated. A drop of 0.5% to 0.75% can make sense on a large balance if you stay past the break-even point. Run the numbers rather than relying on a rule.

Question 3

Should I roll closing costs into the new loan?

Accepted Answer

Rolling costs in avoids cash upfront but increases the balance and interest, so the break-even gets longer. If you plan to move soon, paying cash or taking a lender credit may be better.

Question 4

Does restarting the term cost me?

Accepted Answer

Yes. A new 30-year loan after seven years of payments lowers the monthly payment but extends total interest. Compare total interest, or choose a shorter term like 20 or 15 years to avoid resetting the clock.

Question 5

What closing costs should I expect?

Accepted Answer

Refinance closing costs typically run 2% to 5% of the loan amount, including origination, appraisal and title. Some lenders offer no-closing-cost options in exchange for a higher rate.

Refinance Break-Even
Calculator

How to read break-even

Frequently Asked Questions

Refinance Break-EvenCalculator

How to read break-even

Frequently Asked Questions

Refinance Break-Even
Calculator