Refinancing replaces one loan with another. The comparison should include fees, the new term, total interest, and how long the borrower expects to keep the loan.
Find the break-even month
Divide relevant upfront costs by monthly savings to estimate when the transaction begins to pay back.
Watch the term reset
Starting a new thirty-year schedule can lower the payment while extending debt far beyond the original payoff date.
Compare loan estimates
Standard disclosures make rates, points, and closing costs easier to compare across lenders.
Sources
- Consumer Financial Protection Bureau, Refinancing a Mortgage.