Refinancing replaces one loan with another. It is worth doing when the savings clear the costs inside the time you plan to keep the loan.
The break-even test
Divide total closing costs by the monthly payment saving. The result is the number of months before you are ahead. If you expect to move or sell before then, the refinance loses money.
Resetting the term
A lower payment on a longer term can raise total interest even at a lower rate. Compare total cost to maturity, not the monthly payment alone.
Cash-out caution
Turning unsecured debt into mortgage debt lowers the rate and moves the risk onto your home. That trade deserves more thought than a rate table.
