Break-even point (refinancing)

Refinancing usually costs 2% to 6% of the loan amount in closing costs. The simple break-even point is those costs divided by your monthly payment savings: $4,800 in costs and $200 a month in savings breaks even after 24 months.

If you expect to sell or refinance again before the break-even point, the refinance probably loses money. A more careful comparison also looks at total interest over the time you'll keep the loan, since resetting to a new 30-year term can lower the payment while increasing lifetime interest.