Start by naming the problem you want to solve: lower required payment, a shorter repayment period, a different rate structure, or access to equity. A refinance changes the loan contract and may add costs, so evaluate the outcome in dollars.
A beneficial refinance should solve your stated problem after accounting for costs.
Compare from today forward
Use the current balance and remaining term, not the original loan amount and original term. Compare them with the proposed balance, rate, and term. If costs are financed, add them to the new balance. Taxes and insurance are separate from financing savings.
Distinguish payment relief from cost savings
Restarting a longer term can lower the required payment while extending interest payments. Compare total scheduled interest and remaining balances at a common future date. If payment flexibility is the goal, acknowledge that benefit separately from an interest-saving claim.
Estimate when costs are recovered
Divide eligible transaction costs by monthly principal-and-interest savings for a simple break-even estimate. An escrow refund returns money already held for you; it is not lender savings. A gap between scheduled payments also does not mean interest stops accruing.
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CFPB: Understanding your Loan Estimate ↗CFPB: Points and lender credits ↗General education, not an approval or personalized recommendation. Loan terms and eligibility vary. Our editorial standards.