Corey Loans CaliforniaRefinancing can save you real money — or quietly cost you it. The difference comes down to a handful of questions most lenders skip. Work through these before anyone tries to sell you a new loan.
The 5 questions
What are you actually trying to do?
Every refinance serves a goal. Get clear on yours first — it decides whether refinancing even makes sense.
- Lower my payment — usually needs a meaningfully lower rate
- Pay off faster — shorten a 30-year to a 15- or 20-year term
- Pull out cash — tap equity for renovations, debt payoff, or investment
- Drop mortgage insurance — if you've reached ~20% equity on an FHA/low-down loan
- Ditch an adjustable rate — lock a fixed rate before an ARM adjusts
What's your break-even point?
This is the number that matters most. Refinancing has closing costs. Your break-even is how many months of savings it takes to earn those costs back. Refinance below that line and you can actually lose money.
Break-even months = total closing costs ÷ monthly payment savings. If it costs $4,000 to save $200/month, you break even in 20 months. Use the worksheet below.
How long will you stay in the home?
If your break-even is 20 months but you're selling in a year, the refinance doesn't pay off — no matter how good the rate looks. Your timeline and your break-even have to line up.
Does the rate and term math actually work?
A lower rate on a brand-new 30-year term can mean you pay more total interest, even with a smaller monthly payment — because you just reset the clock. We look at total cost, not just the monthly number.
Rule of thumb: chasing a rate that's only 0.25–0.5% lower rarely clears the closing costs. There's no magic threshold — the break-even math decides.
What will it really cost — and how will you pay it?
Closing costs typically run 2–5% of the loan amount. You can pay them upfront, roll them into the loan, or take a slightly higher rate in exchange for lender credits. Each choice changes your break-even. I'll show you all three side by side.
Your break-even worksheet
Staying longer than that? A refinance likely makes sense.
When refinancing usually makes sense
✓ Rates dropped meaningfully
Enough that your savings clear the closing costs well within your timeline.
✓ You'll stay past break-even
You plan to keep the home longer than it takes to recoup the costs.
✓ You can drop mortgage insurance
You've hit ~20% equity and can remove FHA MIP or PMI.
✓ You need the equity for a real goal
A cash-out funds something that genuinely moves you forward.
And when it doesn't
If you're moving soon, if the savings barely beat the costs, or if resetting to a new 30-year term erases the benefit — the honest answer is wait. I'd rather tell you "not yet" and earn your call when the timing's actually right.
Documents to have ready
- Recent mortgage statement (current balance & payment)
- Last 2 pay stubs or year-to-date profit & loss
- W-2s or tax returns for the last 2 years
- 2 months of bank & asset statements
- Homeowners insurance declaration page
- Recent statement for any debt you plan to pay off with a cash-out
Want the math run on your loan?
Send me your current rate and balance and I'll run your real break-even — free, no obligation. If it's not worth it yet, I'll say so.