Compare your current mortgage against a refinanced one — new payment, true APR including points and fees, lifetime savings, and how long it takes to break even.
A refinance almost always comes with upfront costs — points paid to buy down the rate, lender fees, closing costs. The advertised "note rate" ignores all of that; the APR doesn't. It answers a more honest question: given what you're actually walking away with after fees, what rate would you need to have borrowed at, with no fees at all, to end up paying the same? That's always a little higher than the note rate whenever there are upfront costs, which is why comparing APRs — not note rates — is the fairer way to shop refinance offers.
Refinancing isn't free the moment it closes — you're paying real money upfront to lower your rate. The break-even point is when the interest you've saved by having a cheaper loan finally catches up to and exceeds what you paid to get it. Refinance and move within a couple of years, and you may never reach that point; stay in the loan for a decade, and the savings can be substantial. The math only pays off if you outlast the break-even point.
Pulling equity out as cash increases the new loan's balance, which increases both the monthly payment and the total interest charged over the loan's life — on top of whatever rate change you're also making. It can still be the cheapest way to access a large sum of money compared to other borrowing, but it's rarely "free" money in the way it can feel.
One point equals 1% of the loan amount, paid upfront in exchange for a lower interest rate. Whether points are worth paying depends heavily on how long you plan to keep the loan — the longer you stay, the more likely the lower rate earns back its upfront cost.
Only if you let it. Choosing a new 30-year term when you'd already paid down several years of a previous 30-year loan does restart the countdown — picking a shorter new term (or one that matches your remaining time) avoids stretching the payoff back out.
Not by itself. A lower payment achieved by extending the term can mean paying more in total interest even at a lower rate — that's exactly why this calculator compares lifetime cost, not just the monthly number.
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