Find out if refinancing your mortgage saves money — and how long until you break even on closing costs.
Refinancing makes financial sense when your monthly savings exceed the cost of refinancing within a timeframe you plan to stay in the home. The general rule of thumb is that refinancing is worth it if you can reduce your rate by at least 0.5–1% and plan to stay long enough to recoup closing costs.
Rate-and-term refinance: Lowers your rate and/or changes the loan term. Cash-out refinance: Borrows more than owed to access home equity as cash — useful for home improvements or debt consolidation, but increases your loan balance. Streamline refinance: Simplified process for FHA/VA loans with minimal documentation.
Closing costs typically run 2–5% of the loan amount ($4,000–$10,000 on a $200,000 loan). Some lenders offer "no-closing-cost" refinances by rolling costs into the loan or accepting a slightly higher rate. Calculate your break-even point to determine if the savings justify the upfront cost.