Start by gathering the important details of your current mortgage, including the outstanding balance, interest rate, monthly payment, remaining term, and estimated total interest still to be paid. Then collect the same information for the proposed refinance, including the new rate, loan term, estimated closing costs, and any amount being added to the new loan. Compare the monthly payment, total interest, upfront costs, and estimated break-even period. It is also important to consider whether the new loan changes your repayment timeline. A lower monthly payment may look attractive but could result from extending the loan term. You can use a refinance calculator to compare scenarios and a refinance break-even calculator to estimate when the upfront costs may be recovered. Looking at all of these factors gives you a more complete comparison than simply comparing interest rates.
