When refinancing a mortgage still makes sense

A refinance replaces your current loan with a new one. It helps when the new rate, after closing costs, saves money over the years you will actually stay in the house. If you plan to move in three years, a lower rate with $6,000 in fees may never break even. Ask the lender for the break-even month: total closing costs divided by the new monthly savings. If that date is after you expect to sell, keep the current loan. Also check whether you are restarting a 30-year clock on a loan that was already halfway paid down. Cash-out refinances are a separate decision. Pulling equity to pay credit cards can work if the card rate is high and you stop adding debt. It fails if the extra mortgage years cost more interest than the cards would have. Credit score, loan-to-value, and occupancy all change the offer. A second home or a recent late payment can erase the advertised rate. Get a Loan Estimate from two lenders on the same day so the fees are comparable.