When does refinancing a mortgage make sense?

Refinancing can make sense if the new interest rate is meaningfully lower, you plan to keep the home long enough to break even on closing costs, or you want to shorten the term, remove mortgage insurance, or switch from an ARM to a fixed rate.

How do I calculate refinance break-even?

Break-even months = Total closing costs ÷ Monthly payment savings. If you expect to keep the loan longer than the break-even period, refinancing is more likely to pay off.

What credit score do I need to refinance?

Many conventional refis favor scores of 680+ for competitive pricing, though some programs allow lower scores. A higher score typically qualifies for better rates and lower cost.

What’s the difference between rate-and-term and cash-out refinance?

Rate-and-term refi replaces your current loan with a new one to change the rate and/or term. Cash-out refi increases the loan amount so you receive cash from your equity, usually at a higher rate or pricing.

Will refinancing reset my amortization schedule?

Yes—new loans start a new amortization schedule. You can choose a shorter term to reduce total interest or keep a similar remaining term to focus on rate savings.

How much lower should the rate be to justify a refinance?

There is no fixed rule, but many homeowners look for 0.50%–1.00%+ reductions. Always compute the break-even because closing costs and how long you’ll keep the home matter more than a specific threshold.

Can refinancing remove PMI/MIP?

Yes—if your new loan-to-value is at or below the threshold (often 80%), you may remove PMI on conventional loans. FHA MIP rules differ; many refi to conventional to eliminate monthly MIP after sufficient equity.

What fees should I expect when refinancing?

Common fees include appraisal, origination, discount points (optional), title, recording, credit, and various third-party costs. Your Loan Estimate itemizes each fee so you can compare lenders.

Refinance Calculator

Compare your current loan to a new offer. See the new payment, APR, break-even, and lifetime savings.