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Refinancing replaces your current mortgage with a new loan, usually at a lower interest rate. The key question is whether the monthly savings justify the closing costs. The break-even point is how many months it takes for cumulative savings to exceed the upfront costs. If you plan to stay in the home past the break-even, refinancing is generally beneficial.
Review the inputs carefully and treat the output as an estimate. For decisions involving money, taxes, health, law, or security, compare the result with trusted professional guidance when needed.
When does refinancing make sense?
A general rule is to refinance when you can lower your rate by at least 0.5–1% and plan to stay in the home long enough to recoup closing costs. The break-even period shown by this calculator is the key metric.
What are typical refinancing closing costs?
Closing costs for a refinance typically range from 2–5% of the loan amount. They include origination fees, appraisal, title search, and other lender fees. Some lenders offer no-closing-cost refinances at a higher rate.
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