Should you refinance? Compare your current loan to a new rate and see your savings, break-even point, and total interest saved.
Refinancing replaces your current mortgage with a new one, usually at a lower interest rate. The key question is whether the monthly savings justify the closing costs. A common rule of thumb: if you can lower your rate by at least 0.75% and plan to stay in the home for 3+ more years, it is probably worth exploring.
The break-even point is how many months it takes for your monthly savings to cover the closing costs. If closing costs are $6,000 and you save $200/month, break-even is 30 months. If you plan to sell or move before that point, refinancing may cost you more than it saves.
A lower monthly payment does not always mean you save money overall. If you refinance from a 15-year loan into a new 30-year loan, your payment drops but your total interest over the life of the loan could increase significantly. This calculator shows both monthly savings and total lifetime cost so you can see the full picture.