Rent vs. Buy
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FAQ
Your questions answered.
Is it worth refinancing if rates drop by 0.5%?
On a $700,000 loan, a 0.5% rate reduction saves approximately $271/month. With 2.5% closing costs ($17,500), the break-even is 65 months — about 5.4 years. That makes a 0.5% refinance worth it only if you are confident you will stay in the home for at least 6–7 years. For larger loan balances or longer planned stays, the math becomes more favorable.
What are current refinance rates in 2026?
As of February 2026, the average 30-year fixed refinance rate is approximately 6.16%, and the 15-year fixed is approximately 5.44%, per Freddie Mac's Primary Mortgage Market Survey (week of February 26, 2026). These are near three-year lows. Individual rates depend on credit score, loan balance, LTV, and lender.
Should I refinance or get a HELOC?
If you need cash from your equity and have a mortgage rate below 5.5%, a HELOC almost always wins. A cash-out refinance replaces your entire mortgage at the new (higher) rate — costing you significantly more on the balance you were already financing cheaply. A HELOC leaves your low-rate mortgage intact and adds a second lien only for the new borrowing. See Hauser's cash-out refinance vs. HELOC comparison for the full analysis.
What happens if I refinance and then sell before break-even?
You lose money on the refinance. If you paid $17,500 in closing costs and saved $506/month but sell at month 20, you have recovered only $10,120 of your $17,500 investment — a net loss of $7,380. This is why confirming your timeline before refinancing is as important as confirming the rate.
Does refinancing reset my 30-year clock?
Yes, unless you choose a shorter term. Refinancing to a new 30-year loan when you have 22 years remaining means paying on the home for 38 years total. If you want to avoid this, request a term that matches your remaining years, or consider a 20- or 15-year refinance instead.
How to Use This Calculator
The calculator has two sections: Current Mortgage and New Loan Terms.
Current Mortgage
Home Value ($): Enter your home's current estimated market value.
Loan Balance ($): The amount you currently owe — available on your most recent mortgage statement.
Current Rate (%): The interest rate on your existing mortgage, shown on your original loan documents.
Remaining (Years): How many years are left on your current loan. If you took out a 30-year mortgage 3 years ago, enter 27.
Current Monthly Payment is calculated automatically based on your Loan Balance, Current Rate, and Remaining Years. You do not need to enter this — it updates as you adjust the fields above.
New Loan Terms
New Rate (%): The rate you've been quoted for the refinanced loan, or a target rate you're modeling.
Cash Out ($): If you want to pull equity out as part of the refinance, enter the amount here. This increases your new loan balance above your current payoff amount. Leave at $0 for a rate-and-term refinance.
Loan Term (in Years): Choose 15, 20, 25, or 30 years. Note that choosing a term longer than your remaining years resets the clock — extending the life of your mortgage and increasing total interest even if the monthly payment drops.
Closing Costs ($): Enter the closing cost estimate from your lender. If you don't have one yet, a typical refinance runs 2–3% of the new loan amount.
Roll closing costs into loan: Toggle this on to add closing costs to your new loan balance rather than paying them upfront. This eliminates the out-of-pocket cost but increases the loan amount you're paying interest on.
The calculator returns your New Monthly Payment, your monthly and lifetime savings, your break-even timeline, and a side-by-side comparison of total interest on your current loan versus the new loan.
The Break-Even Point: The Most Important Number
Refinancing is not free. Closing costs typically run thousands of dollars. The break-even point tells you how many months of monthly savings it takes to recover that cost.
Break-even (months) = Closing Costs ÷ Monthly Savings
At $599/month in savings against $15,500 in closing costs, you break even in approximately 26 months. Every month after that is net gain. Sell or refinance again before that point and you lose money on the transaction.
The calculator updates the break-even automatically as you adjust your inputs. Before committing to a refinance, compare the break-even timeline to your honest estimate of how long you plan to stay in the home.
Cash-Out Refinance: What the Calculator Shows
If you enter a Cash Out amount, the calculator adds that to your new loan balance and recalculates accordingly. This lets you model a cash-out refinance alongside a rate-and-term refinance in the same tool.
Keep in mind that a cash-out refinance replaces your entire mortgage at the new rate — including the balance you were already carrying. If your current rate is significantly lower than today's market, pulling equity via a HELOC may preserve more long-term value than refinancing the full balance. See the HELOC Calculator to compare.
Does Refinancing Reset Your Mortgage Clock?
Yes — unless you choose a term equal to or shorter than your remaining years. Refinancing 3 years into a 30-year mortgage into a new 30-year loan means you will have paid on that home for 33 years total. The monthly payment may drop, but total interest paid often increases.
Use the Loan Term selector to model a term that matches your remaining years, or consider a 15 or 20-year term to build equity faster while locking in a lower rate.
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