Start from what you want to change, then find the refinance that fits
Goal: a lower payment
Straight answer
A payment can drop because the new rate is lower, because the term is longer, or because mortgage insurance falls away. Only a lower rate reduces cost without a catch; stretching the term usually raises total interest. Compare the closing costs with the monthly drop to see how long the savings take to pay back.
Last reviewed against the primary sources listed below.
Three levers
| Lever | Lowers payment | Watch out for |
|---|---|---|
| Lower rate | Yes | Closing costs |
| Longer term | Yes | More total interest |
| Dropping mortgage insurance | Yes | May not need a refinance |
People also wonder
Is refinancing worth it to lower my payment?
It can be if you keep the loan long enough for monthly savings to exceed closing costs and the new term does not add more interest than you want.