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Refinancing
5 min read
When does refinancing actually pay off?
A lower rate is only half the story. Here is how to find your break-even month, and why it matters more than the rate.
Elena Marsh
Senior mortgage advisor
Find your break-even month
Divide your closing costs by the amount you will save each month. If closing costs are $4,800 and you save $200 a month, you break even after 24 months.
Think about how long you will stay
If you plan to move before your break-even month, refinancing will cost you money, even with a lower rate.
Look beyond the payment
Resetting to a new 30-year term can lower your payment but raise the total interest you pay. Compare the total cost, not just the monthly number.
