What are the costs of refinancing?
Refinancing with closing costs in mind
If your goal in refinancing is to save money on your mortgage payment, it may be helpful to know your break-even point. This is the length of time it'll take for your new monthly savings to equal your refinance closing costs. This often takes a few years, depending on those costs and how much you save. In other words, if you plan on selling your home before you break even, it may not be worth refinancing.
You can calculate your break-even point by dividing your refinance costs by the amount you'll save each month with your lower mortgage payment.
For example, if your refinance costs total $5,000 and a refinance mortgage will save you $200 a month, your calculation would be: $5,000 ÷ $200 = 25 months until you break even.
If you don't plan on staying in your house for that long, refinancing might not make sense in the long run.