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Start with the change you want, then compare the cost of replacing your mortgage with the cost of keeping it.
A refinance replaces your existing mortgage. Your goal might be a different payment, a shorter payoff period or access to equity. These goals involve different tradeoffs; a lower monthly payment alone does not establish that the new loan costs less overall.
Review the new Loan Estimate, closing charges and whether costs are paid now or included in the loan. A no-closing-cost offer still has a cost, often through a higher rate or a larger balance. Compare the remaining term on your current loan with the proposed new term.
For a rough starting point, divide upfront refinancing costs by monthly savings. That simple break-even calculation does not capture every effect of changed balances, terms or taxes. Ask for a comparison of total costs over the period you expect to keep the loan, and consider what happens if you move sooner.
By Anthony Piccone · 7th Level Mortgage LLC
CFPB: How no-closing-cost refinancing works
General information is useful. A mortgage professional can help you evaluate the facts that apply to you.
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