13:00 · what I do
Refinance, cash-out and the break-even
A refinance is only ever worth it against a specific date: the month the savings have paid back the costs. If you are going to sell before that month, the lower rate is a worse deal than the one you have.
Where this one goes wrong
Three things worth knowing before you are under contract, rather than after.
The break-even is the only number that matters
Divide total costs by monthly saving and you get the month it pays back. Our break-even calculator does it and shows the cumulative curve, so you can see how flat the decision is around the crossing.
Restarting the clock has a cost
Refinancing 22 years into a 30-year loan back to a new 30 lowers the payment and can raise total interest. A shorter term, or the same term with the old payoff date, is often the better version of the same idea.
Cash-out is priced differently
Taking equity out generally prices worse than a straight rate-and-term refinance, and the limits are tighter on 2–4 units. Ask for both quotes side by side.
Illustrative throughout. Percentages and thresholds named on this page describe how these programs generally work, not a commitment about your file. Program rules change, lenders add their own overlays, and nothing here is an offer to lend or a rate quote.
Also
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Reach me directly
Talk about a refinance file
Whatever stage you are at. If it is a house you have not seen yet, that is the useful time.
- Fastest(401) 555-0128Call or text. It rings on one phone.
- Writtennadia@botelho-mortgage.exampleReplies weekdays, usually within a couple of hours.
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