How big a rate drop justifies refinancing?

The classic rule of thumb is 0.75–1%, but the break-even math is the real rule: a cheap refi at 0.5% can win on a large balance; 1% can lose with high costs and a short stay.

Does a cash-out refi change the math?

Yes — the new balance grows, so run the payment on the higher loan amount. Cash-out is a separate decision (you are borrowing more) stacked on the rate decision.

What counts in closing costs?

Origination, appraisal, title, recording, points — typically 2–5% of the loan. Get the Loan Estimate and use its "total closing costs" line.

Refinance Break-Even Calculator

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How the refinance calculator works

The break-even rule

Refinance value = (monthly savings) ÷ (closing costs). Under ~24 months is excellent, 24–48 is reasonable if you will stay, beyond 48 is a bet on your own stability. The rule collapses all the sales talk into one number you can check against your actual plans.

The term-reset trap

Refinancing a 22-year-remaining loan into a fresh 30 lowers the payment but can raise lifetime interest even at a lower rate — the calculator shows the term's interest line for exactly this reason. The honest fix: refinance into a term near your remaining years, or keep paying the old payment and let the savings accelerate principal.

Rate vs costs: you pick one

No-cost refis (lender credits the closing costs) run ~0.25% higher in rate. Break-even day one, but you pay the difference monthly. Paying points/costs upfront wins if you stay long past break-even; no-cost wins in falling-rate environments where you will refi again soon.