When Refinancing Is Worth the Cost
Refinancing replaces your current mortgage with a new one, typically to secure a lower interest rate, shorten your loan term, or switch from an adjustable to a fixed rate. Refinancing tends to make the most sense when rates have dropped meaningfully since you took out your original loan, or when your credit has improved enough to qualify for significantly better terms. It’s less worthwhile if you’re planning to move soon, since closing costs can take a few years to recoup through monthly savings.
Before refinancing, it’s worth weighing a few things:
- How much lower is the new rate compared to your current one?
- How long do you plan to stay in the home after refinancing?
- What are the closing costs, and how many months will it take to break even?
Our mortgage calculator can help you compare your current payment against a new rate and term. If your goal is simply understanding how your balance and payment split have changed over time, our home amortization calculator can show your updated schedule after refinancing.