Divide the total cost of the refinance by your monthly savings; that is your break-even in months. As an illustration, a $3,500 cost against $200 a month in savings breaks even in roughly 17 months. As a general guideline, a break-even inside a year or two is usually reasonable, and shorter is better. The red flag is a bloated cost against thin savings. We regularly see extreme examples, like an $18,000 to $20,000 cost to save a couple hundred dollars a month, and that is a bad deal no matter what the loan is called. A cost that far out of line with the savings usually means points or fees are buried in the deal, and the break-even stretches to many years. We lean against paying points in the first place. Beyond the break-even: - Term reset. Check whether you are starting a fresh 30 years and what that does to total interest. Resetting can be a valid choice, but make it on purpose. - Mortgage insurance. Confirm what changes on the new loan. - Apples to apples. Same term, real costs, no teaser math. Get the Loan Estimate and read the actual fees rather than a verbal pitch. Send it to us and we will run the break-even with you. The dollar figures here are illustrative.