Question 1

What break-even period is considered worth it?

Accepted Answer

It depends on how long you plan to keep the loan — a common rule of thumb is refinancing makes sense if you’ll stay in the home well past the break-even point, often cited as 2-3 years, but there’s no universal cutoff. If you might sell or refinance again before break-even, the closing costs likely won’t be recovered.

Question 2

Why might a refinance lower my payment even at a similar rate?

Accepted Answer

Resetting to a new 30-year term after you’ve already paid down several years of your original loan spreads the same (or lower) balance over more months, which lowers the payment — but extends how long you’re paying interest overall. Check the lifetime interest comparison, not just the monthly payment, before deciding.

Question 3

Should closing costs be paid upfront or rolled into the loan?

Accepted Answer

This calculator assumes you pay closing costs out of pocket and compares that cash outlay against monthly savings. If you roll costs into the loan balance instead, your break-even math changes — the new loan amount grows, which slightly increases the new monthly payment and reduces the savings this comparison assumes.

Refinance Closing Costs & Break-Even Calculator

Closing costs ÷ monthly savings

Common questions