There is a rule of thumb you hear a lot: refinance when rates drop 1%. It is a bad rule. The right question is simpler.
Two numbers
Refinancing is worth it when both of these are true:
- Your monthly payment drops by enough to matter. For most households that is at least $150 a month.
- You will still own the house long enough to pay back the closing costs. If closing costs are $8,000 and you save $200/month, break-even is 40 months. If you plan to move in two years, you lose money.
The formula
Break-even months = closing costs ÷ monthly savings. Closing costs on a refinance usually run 2%–3% of the loan balance. CasaMint uses 2.5% by default and shows the math.
The trap
Restarting a 30-year mortgage after 8 years of payments means you pay more interest overall, even at a lower rate. A shorter term or extra principal payments often beats a refinance. We show that trade too.
Run your own numbers on the Rate Tracker — it will tell you honestly whether the math works today.
