Build a true before-and-after comparison
Use the same treatment of taxes and insurance, separate one-time costs from prepaid items, and compare principal-and-interest and mortgage-insurance changes. A lower payment caused by restarting a longer term is not automatically a cost saving.
Test the expected holding period
If the home will be sold or the loan repaid before costs are recovered, the transaction may not meet the stated objective. Rate uncertainty and future refinance hopes should not be treated as guarantees.
Consider alternatives
Depending on the goal, additional principal, loan recast if available, home-equity financing or no action may deserve comparison. Tax treatment requires a qualified tax adviser.
People and publishers worth following
These links provide additional industry perspective. USAspending is not affiliated with, endorsed by, or speaking for these accounts.
Frequently asked questions
How do I know if it is the right time to refinance my mortgage?
Identify the goal, compare the current loan with a written new-loan scenario, calculate the relevant costs and monthly change, and test whether you expect to keep the new loan beyond the break-even point. Also compare the new term, principal balance, mortgage insurance and total interest rather than relying on the rate alone.
Is a no-closing-cost refinance free?
Usually not. Costs may be offset through a higher rate, lender credit or financing structure. Review the complete terms.
Should I refinance whenever the rate is lower?
No. Savings, costs, term, balance and expected holding period determine whether it advances the goal.
Claims in this guide were checked against the linked primary sources. Program guidelines can change; personal eligibility requires a complete application and review.