Should You Refinance Your Mortgage? How to Decide
Published Apr 13, 2026 · 6 min read
Refinancing replaces your current mortgage with a new one at a lower rate. But closing costs mean it's not always worth it.
The Breakeven Calculation
Breakeven Months = Closing Costs ÷ Monthly Savings
Example: $4,000 in closing costs, saving $200/month = 20 months to break even. If you'll stay in the home longer than 20 months, refinancing wins.
When to Refinance
- Your new rate is at least 0.75-1% lower than your current rate
- You plan to stay in the home past the breakeven point
- You want to switch from ARM to fixed rate for stability
- You want to remove PMI by refinancing at 80% LTV
When NOT to Refinance
- You're planning to move within 2-3 years
- You've already paid most of the interest (late in loan term)
- Closing costs eat up most of the savings
Try it: Use our Mortgage Refinance Calculator to see your breakeven point and total savings.