Should you refinance?

A refinance makes financial sense when your monthly savings exceed the cost of refinancing within a timeframe that matches how long you plan to keep the loan.

Break-even formula: Closing costs ÷ Monthly savings = Break-even months.

If your closing costs are $6,000 and you save $300/month, your break-even is 20 months. If you plan to stay in the home for 5+ years, the refinance likely makes sense. If you're moving in 18 months, it doesn't.

Closing costs

Closing costs for a refinance typically run 2–3% of the loan amount. On a $400,000 balance, expect $8,000–$12,000 in closing costs. Some lenders offer "no-cost" refinances — they roll closing costs into the rate or loan balance. We show you both options side-by-side.

When refinancing makes the most sense

Rates have dropped 0.5%+ below your current rate
You're switching from an ARM to a fixed rate
You want to take cash out
You want to shorten your term (15-year vs. 30-year)
You're eliminating FHA MIP by refinancing to conventional with 20%+ equity

Colorado and Florida homeowners who bought at 2020–2022 rates (2.75–3.5%) should not refinance into today's market. Homeowners who bought at 6.5–7.5% and rates drop to 5.5–6% are prime refinance candidates.

Refinance break-even calculator.