When refinancing makes sense.
Refinancing replaces your existing mortgage. It can lower your rate, shorten your term, remove mortgage insurance, or unlock equity — each with different math.
Direct answer
Refinance when the long-term savings from a new rate, term, or structure exceed the total cost of the new loan — factoring in your expected time in the home.
Key takeaways
- 01
Break-even months = closing costs ÷ monthly savings.
- 02
A shorter term saves interest but raises the payment.
- 03
Cash-out refinancing converts equity to cash but resets the loan.
Rate-and-term refinance
Replace your existing loan with a new rate or term without pulling cash out.
Cash-out refinance
Borrow more than the current balance and take the difference as cash — often used for renovations, debt consolidation, or investing.
Related calculators
Related loan programs
Frequently asked
What's a good break-even?
Break-even should be shorter than the time you expect to keep the loan. Many borrowers target 24–36 months.
Should I refinance to a shorter term?
If cash flow allows, moving from 30 to 20 or 15 years can save meaningful interest even at a similar rate.
Does cash-out affect my rate?
Cash-out loans often price slightly higher than rate-and-term refinances.
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