Should I refinance my mortgage?
The short answer
Refinance if the new rate is at least 0.75% lower, you'll stay in the home past the break-even point (closing costs / monthly savings), and you're not restarting a 30-year clock late in life.
Signals to weigh
- 01Rate drop of 0.75% or more.
- 02Break-even under 24 months and you'll stay 3+ years.
- 03Cash-out only for higher-return uses — not lifestyle inflation.
- 04You won't extend the amortization past your planned retirement.
How to decide
- Step 1Get 3 quotes on the same day — rates move.
- Step 2Compute break-even: total closing costs divided by monthly savings.
- Step 3Keep the payoff date the same or earlier — pay the shorter term or overpay.
- Step 4Lock only when the numbers work; don't refinance for a small psychological win.
Framework used
Cost-Benefit Analysis →Full walkthrough of the framework, with examples and pitfalls.
Consider these alternatives
- ·Recast — one lump payment, keep the rate, lower the payment. Cheaper than refinancing.
- ·Do nothing and overpay principal monthly if the rate difference is small.
Run this decision inside Compass
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