Refinance Scenario

Should I Refinance My Mortgage in 2026?

Find out if refinancing actually makes financial sense. The trade-off is between monthly savings and lifetime interest costs. Enter your current loan and new rate below to find your break-even point.

Current Loan

$
%
yrs

New Loan

%
$

Total Cost Over Time

Keep current loan
Refinance

Refinancing costs more

Your monthly payment increases by $471 - but you pay off the loan 10 years sooner and save $212,771 in total interest.

Current payment$2,530/mo
New payment$3,001/mo
Monthly savings-$471/mo

Break-even

Never
Total interest saved
Higher monthly payment, but 10 fewer years of payments
+$212,771

Estimates based on your inputs. Actual results may vary. Terms →

What your results mean

By refinancing to a 6.25% rate on a 15-year term, you pay an extra $471 per month. Because your new payment is higher, you will never recover your closing costs through monthly savings. Over the life of the loans, you will save a net total of $212,771.

Should you refinance?

Worth considering if:

  • You plan to stay in the home past the break-even point
  • Your rate drops by at least 0.75%
  • You can roll closing costs into the loan or afford them upfront

Think twice if:

  • You plan to sell or move within the next few years
  • The new term resets your amortization significantly
  • Closing costs exceed your monthly months of savings

What to do next

→ Calculate your new monthly payment→ See rent vs. buy comparison→ How much home can you afford?

Rates shown are for illustration. Contact your lender for a formal quote.

The Break-Even Point

To find your break-even point in months, divide your total closing costs by your monthly savings. For example, $6,000 in closing costs ÷ $200 monthly savings = 30 months to break even.

The Term Trap

Refinancing a 25-year remaining term back to a 30-year term drops your monthly payment but drastically increases the total interest you pay over the life of the loan. Always compare the total lifetime cost.

Cash-Out vs. Rate-and-Term

A rate-and-term refinance simply changes your interest rate or loan duration. A cash-out refinance lets you borrow against your home equity, increasing your loan balance to give you cash in hand.

Frequently Asked Questions

When is it worth it to refinance in 2026?

A common rule of thumb is that refinancing is worth it if you can drop your interest rate by at least 0.75% to 1%, and you plan to stay in the home long enough to pass your break-even point (when your monthly savings exceed your closing costs).

Does refinancing reset my 30-year mortgage?

Yes, if you refinance into a new 30-year loan, the clock resets. This lowers your monthly payment but increases your total lifetime interest. To avoid this, you can refinance into a shorter term like a 15-year or 20-year mortgage.

How much are closing costs on a refinance?

Refinance closing costs typically range from 2% to 5% of the total loan amount. These fees cover the appraisal, origination fees, title insurance, and other administrative costs.

Should I refinance if I plan to move in 2 years?

Generally, no. It usually takes several years to recover the thousands of dollars in closing costs through your monthly savings. If you move before your break-even point, refinancing will actually cost you money.

What to calculate next

Mortgage Payoff Calculator

Calculate how many years of payments you can skip by adding to your principal.

Extra Mortgage Payment Calculator

See how extra monthly payments can reduce your mortgage term and total interest.