Write down the starting point.
Gather your current balance, interest rate, remaining term, mortgage insurance, and payment details. Separate principal and interest from taxes and insurance so the comparison is consistent.
Compare the full new loan.
Ask for the new loan amount, interest rate, term, APR, lender charges, other closing costs, and any lender credits. If fees are added to the loan, include them in the balance you will repay. A lower monthly payment can come from extending repayment, even without a lower overall cost.
Use break-even as a starting point.
For a simple illustration, paying $4,000 in refinance costs to reduce the payment by $200 per month gives a 20-month break-even point. That calculation is not a complete cost analysis; changes to the balance, repayment period, and mortgage insurance can affect the result.
Compare the loans over the number of years you realistically expect to keep the mortgage. Include the remaining balance at that point, not just the payments made along the way.
Give equity a separate decision.
If you want cash out, compare the cost of replacing your whole mortgage with alternatives that keep the existing loan. Consider how additional borrowing affects your equity and long-term obligations. Refinancing is optional; keeping the current mortgage can be a reasonable outcome.
Your questions.
Straight answers.
Should I wait for a particular rate?
There is no universal target. Ask for a comparison based on your actual balance, costs, plans, and available terms.
Can closing costs be financed?
Sometimes, subject to program and equity requirements. Financed costs increase the amount borrowed and can add interest expense.
Sources
General educational information. Program availability, eligibility, pricing, and documentation depend on your state, property, and application. Ask an expert for current options; this page is not a loan offer or approval.