When does refinancing usually reduce total interest cost versus just resetting the clock?

When does refinancing actually save money long-term?

You want to know when refinancing reduces total interest cost instead of just extending your payment timeline. Refinancing typically reduces total interest when you secure a rate that's meaningfully lower than your current rate and you stay in the home long enough to recover closing costs. The math depends on your current rate, new rate, loan balance, and how long you plan to keep the mortgage. Calculate your break-even point by dividing closing costs by monthly payment savings. If you plan to stay beyond that timeframe, refinancing can lower total interest. However, restarting a 30-year term when you have fewer years left on your current loan often increases total interest, even with a lower rate.

Compare two scenarios: keep your current loan versus refinance. Factor in closing costs, new monthly payments, and total interest over your planned timeline. Many lenders provide this breakdown when you request a refinance quote. Share your current loan details and timeline with potential lenders, and they can walk you through the total cost comparison for your situation.