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Should you refinance?

A lower rate and a smaller payment are only half the story. Refinancing costs money too. What actually decides it is your break-even point: how many months of savings it takes to cover the refinance fee.

The rate gets all the attention but break-even is the number that tells you whether a refinance is worth doing at all.
Arjun LalwaniRalo Loan Officer · NMLS #27539505.0 out of 5 stars on Google

In three steps

01
Find your real loan cost
This is the part most people get wrong. Use "Total Loan Costs" (not "Total Closing Costs") to calculate your breakeven. Typically found on your Loan Estimate (Section D) and is the actual price of a refinance.
02
Calculate your monthly savings
The easy part. Current payment minus new payment. That's what a refinance hands back to you every month.
03
Calculate your break-even
Fee ÷ monthly savings = months to earn it back. That's the month the refinance turns from cost into savings.

Breakeven calculator

See exactly when this refinance pays off

Your numbers

Current loan
Original Amount
$
Remaining Balance
$
Original Term
Estimated Home Value
$
Current Rate
%
Monthly Payment (P&I)Calculated from the original loan amount, interest rate, and term. Does NOT include taxes, insurance, or HOA fees.
$
About 60 payments made · 25 yrs remaining
New loan
New Loan Amount
$
New Term
New Rate
%
New Monthly Payment (P&I)Calculated from the original loan amount, interest rate, and term. Does NOT include taxes, insurance, or HOA fees.
$
Loan costs
Total Loan CostsFound in Section D of your Loan Estimate. This is the actual price of the refinance and is used to calculate break-even.
$
Total Other CostsFound in Section H of your Loan Estimate. Includes escrow deposits, prepaid interest, and similar items — costs you would typically pay whether you refinance or not.
$
Total Closing Costs
$
How will you pay your closing costs?
Pay $6,000 in cash at closing.
How Long You'll Keep This Loan10 yrs
Break-even
Mo. 17
1 yr 4 mo
Monthly savings
$368
$4,419/yr
Savings by year 10
$38,186
after paying loan costs
-$6,000Loan costs recoupedBreak evenmonth 17You movemonth 120now2y4y6y8y10y

You break even in month 17 (Jan 2028)

That's 8 yrs 7 mo before you plan to move on. From there, the $368/mo keeps landing in your pocket, adding up to about $38,186 by the time you go. For your plans, this refinance pays for itself.

Where your break-even lands

A good break-even is relative to how long you will keep the house for. The scale below is set against a typical 7-year stay. If you're moving sooner, everything shifts left.

17 mo
Optimal
≤ 2 yrs
Good
2–4 yrs
Depends
4–6 yrs
Hard to justify
6 yrs +

Analysis

Does this refinance make sense for you?

Compared to your current loan

Current loanNew loan
Payments remaining300360
Monthly payment$2,023
$1,654
$369/mo
Total interest$307,185
$295,985
$11,200

How much of your home you'd own over time

Home ownership is the share of your home you own outright — your estimated home value ($400,000) minus what you still owe. As you pay down principal, your stake grows. This chart compares how much you'd own if you keep your current loan versus refinancing.

Assumes your home value stays flat. It does not include appreciation, taxes, or insurance.

You own today
25.1%
$100,400
After refinance
25.1%
$100,400
Ownership gap by 10 yrs
-3.3%
-$13,242 · less than staying put
25%50%75%100%Years from now% of home ownedPlanned movenow2y4y6y8y10y12y14y16y18y20y22y24y26y28y30y
If you'll earn the cost back in under two years and you're not moving soon, refinancing is usually a no-brainer. Past five or six years, I tell people to think twice.
Helly ShahRalo Loan Officer · NMLS #26957015.0 out of 5 stars on Google

Next step

See what you'd qualify for today

See personalized ratesBook a call with a loan officer

An estimate: Mortgage rates shown are estimates based on current market conditions and are not a commitment to lend. Actual rates depend on credit score, down payment, loan type, property type, and other factors. All loan products are subject to credit and property approval. Ralo Corporation (NMLS #2751459) is a licensed mortgage broker.