Should You Refinance Your Mortgage?
Understand when refinancing makes sense and how to calculate your savings
When to Consider Refinancing
Interest Rates Have Dropped
A 0.5% to 1% rate reduction typically makes refinancing worthwhile if you plan to stay in your home long enough.
Your Credit Has Improved
If your credit score has significantly improved since you got your mortgage, you may qualify for better rates.
You Want to Change Terms
Switching from a 30-year to 15-year mortgage can save significant interest, or extending your term can lower payments.
You Need Cash Out
Tap into home equity for renovations, debt consolidation, or other major expenses.
The Break-Even Point
The break-even point is when your monthly savings equal the costs of refinancing. Calculate it by dividing closing costs by monthly savings.
Break-Even Months = Total Closing Costs ÷ Monthly Savings
If you plan to stay in your home longer than the break-even period, refinancing typically makes financial sense.
Refinancing Costs to Expect
Application Fee
$300 - $500
Appraisal
$400 - $700
Title Insurance
0.5% - 1% of loan
Origination Fee
0.5% - 1.5% of loan
Total closing costs typically range from 2% to 5% of your loan amount.