The number that actually decides it
A lower rate looks appealing on its own, but the real question is how long it takes your monthly savings to pay back what the refinance costs you upfront — the break-even point. Stay in the home past that point and you come out ahead; move or refinance again before it, and you may not.
Watch the total interest, not just the payment
Resetting to a fresh 30-year term often lowers the monthly payment even at a similar rate — but restarting the clock can mean paying more in total interest over the life of the loan. Compare both numbers here, and see the Mortgage Payoff Calculator to model paying down the new loan faster with extra payments.
Frequently asked questions
When does refinancing a mortgage make sense?
As a rule of thumb, if you plan to stay in the home longer than the break-even period (the time for monthly savings to recoup the closing costs), refinancing is usually worth it. Leave before then, and you may not recoup what you spent.
What counts as closing costs on a refinance?
Lender fees, appraisal, title insurance and other charges — typically 2-5% of the loan amount. Ask your lender for a loan estimate that itemizes these before deciding.
Does refinancing to a lower rate always save money overall?
Not always — resetting to a new 30-year term can lower your monthly payment even at a similar rate, but restart the interest clock and increase total interest paid over the life of the loan. Compare total interest, not just the monthly payment.
Should I roll closing costs into the new loan?
It avoids paying upfront but increases your loan balance and the interest you pay on it. This calculator assumes closing costs are paid out of pocket for a cleaner break-even comparison — if you plan to roll them in, add that amount to the balance instead.
Last updated: June 2026