There are several ways to think about it: Would it lower your payment, and by how much? How long would it take to break even where the monthly savings add up to the cost of the refinance? (All refinance loans have a cost even so called “no-cost” refis.)

Most refinances are structured so that the cost of the refinance loan is rolled into the loan balance. That means you’re paying interest on the cost of the refinance for the full length of the loan. If the cost of the refinance is $3000 and it is rolled into the loan, and you only make the regular monthly payment, by the time you make your last payment on the loan after 30 years, you will have paid an additional $2,800 in interest on top of the original $3,000 cost of the refinance (based on a 5% interest rate)! That’s why, for most people, the smarter move is to pay at least part of your monthly savings into the mortgage on top of the regular monthly payment until you have brought the loan balance back to where it was before you refinanced. We will explain all your options to you so you can make an informed choice about whether the refinance makes sense for you in your situation.

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