Refinancing can lower your interest rate or shorten your loan term, but it comes with costs. The key metric to evaluate is the break-even point.
How Break-Even Works
Break-even point = Total refinancing costs ÷ Monthly savings
If refinancing costs $3,000 and you save $150 per month, your break-even point is 20 months.
If you plan to stay in the property longer than that period, refinancing may be financially beneficial.
Always calculate total interest savings — not just monthly payment reduction.