Refinancing can save you thousands of dollars, or it can cost you money if done wrong. It all depends on your "Break-Even Point".
Calculate New Payments
Use our calculator to see your new monthly payment.
The 1% Rule of Thumb
Historically, experts said you should only refinance if you can lower your interest rate by at least 1%. However, with closing costs rising, you need to do the math.
Calculating Your Break-Even Point
Refinancing isn't free. Closing costs typically run 2% to 5% of the loan amount. To find your break-even point:
Total Closing Costs ÷ Monthly Savings = Months to Break Even
Example: If closing costs are $4,000 and you save $200/month, it will take 20 months to break even. If you plan to move in 12 months, don't refinance.
Reasons to Refinance
- Lower Monthly Payment: Improve cash flow.
- Shorten Term: Switch from 30-year to 15-year to pay off the home faster.
- Cash-Out: Tap into your home equity for renovations (Use our BRRRR calculator for investors).
- Remove PMI: If your home value has increased, refinancing might eliminate mortgage insurance.