Compare current loan vs. refinanced loan savings
Refinancing is most beneficial when you can lower your interest rate by at least 0.75-1%, plan to stay in your home long enough to break even on closing costs, or need to switch from an adjustable-rate to a fixed-rate mortgage for payment stability.
Beyond closing costs, factor in appraisal fees ($300-$500), title insurance, origination fees (0.5-1.5% of loan), and potential prepayment penalties on your current loan. Some of these may be rolled into the new loan balance but will increase your total debt.
If refinancing costs are too high, consider a mortgage recast (lower payments without a new loan for a small fee), making extra principal payments, or a home equity line of credit (HELOC) if you need cash. Each option has different costs and benefits.