Loan options
You replace your existing mortgage with a new one to change the rate, the payoff length, or both. No money comes back to you at closing. It is the most straightforward refinance there is, and right now it is the right move for far fewer people than the ads suggest.
See if refinancing helps youNo credit pull. One licensed local loan officer.
This is probably you
You bought in the last few years at six or seven percent, and you have been waiting for rates to come down enough to justify doing something about it. Or you are paying mortgage insurance you no longer need because your home has appreciated.
You do not need cash. You need this loan to cost less than it currently does, and you want to know whether the closing costs are worth it or whether waiting is smarter.
Does it earn itself back?
$350,000 balance, dropping from 7.25% to 6.25%. Illustrative, not a quote.
Three years and two months before you are ahead. If you might move inside four years, this is close to a wash. And note the trap: if you were already five years into the old loan, restarting at thirty adds five years of payments back, which can raise total interest even while the monthly figure falls.
Have someone run your break-evenRefinance the rate if
Your rate is meaningfully above market, you are staying well past the break-even, and you ask for a term matching the years you have left rather than a fresh thirty.
Do nothing if
The gap is under about half a point, or you might move within a few years. Waiting costs you nothing, and refinancing too early costs you the closing costs twice.
A new loan pays off the existing balance. You keep the same debt, restructured. People do this for three reasons: to lower the rate, to shorten the term and pay less interest overall, or to move out of a loan type they no longer want, such as leaving an adjustable rate for a fixed one or removing mortgage insurance once they have enough equity.
The maths is simple in principle. Closing costs are real and immediate. The savings arrive monthly. Divide the first by the second and you get your break-even point in months. If you will not still be in the home well past that point, refinancing costs you money rather than saving it.
Lowering your payment by restarting a thirty year term is not the same as saving money. If you are eight years into a mortgage and refinance into a fresh thirty, your monthly payment may fall while your total interest rises substantially, because you just added eight years of payments back on.
Ask for two numbers before deciding: the break-even in months, and the total interest remaining under both the old loan and the new one. A loan officer who avoids the second number is telling you something.
Refinancing makes sense when
Your current rate is meaningfully above today's market and the break-even lands well within your expected stay.
You want to shorten your term, paying more monthly but far less in total interest.
You are leaving an adjustable rate for the certainty of a fixed one.
You have enough equity to drop mortgage insurance, which can justify the move on its own.
Look elsewhere when
You hold a rate below today's market. There is nothing to gain and a great deal to lose.
You are moving before the break-even point arrives.
The only benefit is a lower payment achieved by resetting the clock.
You actually need cash, in which case a second lien or a cash-out is the relevant comparison, not this.
How much does refinancing cost?
Commonly a few percent of the loan amount, covering appraisal, title, origination, and related fees. Some lenders offer credits toward these in exchange for a slightly higher rate, which is worth comparing rather than dismissing.
What is a good break-even?
There is no universal number. Compare the break-even in months against how long you honestly expect to stay. If you plan to be there for a decade and break even in two years, the decision is easy. If you might move in three, it is not.
Can I keep my current payoff date?
Yes. Ask for a term matching the years you have remaining rather than defaulting to thirty. Fewer lenders offer this proactively, but it is usually available if you ask.
Will I need a new appraisal?
Usually, though some programs allow appraisal waivers depending on the loan, your equity, and the property. Your loan officer can tell you early whether you are likely to qualify for one.
Find out if refinancing actually saves you anything.
A licensed local loan officer will show you the break-even and the total interest, both ways.
Get my real numbersFigures on this page are illustrative and are not an offer, quote, or commitment to lend. Rates, terms, and approval are set by the lending partner and vary by borrower, property, and credit. Refinancing extends or resets the term of your debt and may increase the total interest paid over the life of the loan.