Should you refinance your mortgage?
Refinancing replaces your current mortgage with a new one — usually to get a lower rate. It only pays off if the monthly payment savings recover your closing costs before you sell the home or refinance again.
This calculator settles it by finding your break-even month: your total closing costs divided by the monthly payment reduction. If a refinance saves $200 a month and costs $6,400 to close, you break even in 32 months. Stay in the home past that point and the refinance has paid for itself; move or refinance again before it and you paid fees you never recovered.
Watch the term, not just the rate
A lower rate does not automatically mean less interest. Resetting a loan you are several years into back to a fresh 30-year term spreads the balance over more years, so your lifetime interest can rise even as your rate falls. That is why this tool shows total interest for both loans side by side — a lower monthly payment and a higher lifetime cost often travel together. If your goal is to pay less interest overall, compare a shorter new term, or keep making your old payment amount on the new lower-rate loan.
Closing costs and points
Closing costs typically run 2% to 6% of the loan amount and cover the lender's origination fee, appraisal, title insurance and recording fees. Discount points are optional prepaid interest — each point is 1% of the loan for roughly a 0.25% lower rate. You can roll costs into the loan to avoid paying out of pocket, but you then pay interest on them for the full term, which pushes your true break-even later. Your mortgage is secured debt, so it sits outside a payoff plan — for credit cards and other unsecured balances, see our debt snowball guide and the rest of our debt payoff guides.