Guide
The Refinance Guide
Refinancing is a trade, not a discount. This guide walks through the comparison in the order that actually helps you decide.
Identify the goal before the rate
Lowering a payment, shortening a term, removing an adjustable feature, and accessing equity are four different goals with four different right answers. Name yours first.
Compare the current loan to the proposed loan
- Remaining balance and remaining term
- Current payment and proposed payment
- Total closing costs and prepaid items
- How the term changes and what that does to long-term interest
Estimate a simple break-even
A basic break-even divides eligible closing costs by estimated monthly savings. It is a rough orientation tool, not a complete financial analysis, and it ignores taxes, term changes, and what you would do with the money otherwise.
Payment reduction is not the same as interest savings
Restarting a 30-year term can lower a payment while increasing what you pay over the life of the loan. Both facts can be true at once, and you should see both before deciding.
Rate-and-term versus cash-out
A rate-and-term refinance replaces your loan without increasing the balance for cash. A cash-out refinance increases the balance and reduces equity in exchange for funds at closing. Guidelines, pricing, and limits differ between the two.
Factor in how long you plan to keep the loan
If you may sell or refinance again within a few years, the cost side of the comparison carries more weight. If you plan to stay a long time, a term change may matter more than the monthly difference.
This guide is educational information, not financial, legal, or tax advice, and not a commitment to lend. Program rules and requirements change, and your own situation should be reviewed directly.
Last reviewed August 1, 2026.
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