Break-even is the number of months it takes for monthly savings to recoup refinance closing costs. Arizona homeowners can use this calculator to compare the payment and remaining interest on a current loan with a possible new loan.
Enter your current loan and proposed refinance details. The comparison updates as you type.
A good break-even period is one you expect to reach well before you sell the home, pay off the loan, or refinance again. Many homeowners use two to three years as a rough benchmark, but the right answer depends on how long you expect to keep the mortgage and what else the refinance accomplishes.
Only if you choose a new term that extends your payoff date. Replacing a loan with 22 years remaining with a new 30-year loan restarts a 30-year repayment schedule. A 20-year or 15-year refinance may keep you closer to the original payoff date, though the monthly payment may be higher.
Refinance closing costs are often several thousand dollars, but there is no reliable one-size-fits-all percentage. The actual total depends on lender charges, title and escrow fees, appraisal requirements, discount points, and prepaid items. Arizona cost categories are explained in the Phoenix closing costs guide. Ask for a Loan Estimate before deciding whether to pay the costs in cash or finance them.
A rate-and-term refinance is generally for changing the rate, payment, or term without taking meaningful equity out. A cash-out refinance replaces the current mortgage with a larger loan and returns part of the difference as cash. Compare the new payment, closing costs, total interest, and the purpose of the funds before choosing.
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