THE FIELD GUIDE · MORTGAGE PLANNING
When does refinancing earn its keep?
Compare the monthly benefit, upfront cost and time horizon.
Use the remaining balance and term
The original mortgage amount is not the current balance. Enter the remaining years on your existing loan. Compare that with the proposed new term; restarting a long term can reduce the payment while increasing total interest.
Include your real costs
Use closing costs paid out of pocket in this model. If costs will be financed, add them to the new balance in a separate scenario. A no-cost offer may exchange fees for a higher rate; read the Loan Estimate.
Understand the break-even result
Simple break-even equals upfront costs divided by monthly principal-and-interest savings. It is unavailable if the new payment does not fall. The result is not a net-present-value analysis and does not include tax treatment or property costs.
Check the exit plan
A refinance can be sensible for reasons beyond payment savings, including a different term or rate structure. Consider how long you expect to keep the mortgage and what happens if you sell sooner.
This guide is educational. Confirm the figures and conditions for your actual loan.
Official consumer or market guidance ↗