What actually decides a refinance.
In plain language, and sourced.

Refinancing costs money up front (closing costs) and saves money every month (a lower payment). Breakeven is simply how many months of savings it takes to pay back those upfront costs. Divide your closing costs by your monthly savings and you get the number of months until the refinance has paid for itself.

After that point, the savings are yours to keep. Before it, you are still in the hole on the deal. So the real question is not "is the new rate lower," it is "will I stay in this home past breakeven." If you plan to sell or move before then, refinancing loses you money even at a lower rate.

This is the whole engine behind Wend's mortgage verdict. We estimate your new rate from your credit tier, work out the monthly savings, divide your closing costs by it, and compare the breakeven month to how long you told us you plan to stay. A comfortable margin past breakeven is a clear yes; landing right on top of it is a genuine judgment call.

A refinance can chase two opposite things, and they point to different loans. If you keep a long term (say a fresh 30 years) at a lower rate, your monthly payment drops and you free up cash now, but stretching the term back out can mean more total interest over the life of the loan even though the rate is lower.

If instead you shorten the term, often to 15 years, your monthly payment usually rises, but you own the home years sooner and save a large amount of interest. For this goal the right measure is not monthly savings at all; it is total interest saved. A "payment went up" result can still be the smart move.

That is why Wend asks what you want from the refinance up front. For a lower payment we frame the verdict on breakeven and freed-up cash. For paying it off faster we frame it on interest saved and the payoff date, and we will tell you plainly when the higher payment is worth it.

A fixed-rate mortgage keeps the same rate for the whole loan, so your principal-and-interest payment never changes. An adjustable-rate mortgage (ARM) starts with a fixed period, often 5, 7, or 10 years, then adjusts on a schedule for the rest of the term.

After that intro period, an ARM's rate is an index (a public benchmark that moves with the market) plus a fixed margin your lender sets, bounded by caps that limit how much it can jump per adjustment and over the life of the loan. The trap is judging an ARM by its low intro rate alone. If you will still own the home when it starts adjusting, you have to weigh where the rate could land, not just where it starts.

For refinancing, the same logic as student loans applies: a lower rate today is not the same as a lower rate for the life of the loan. If you plan to stay long term, the certainty of a fixed rate is often worth a small premium over an ARM's teaser.

Refinancing has its own closing costs, much like buying the home did: lender origination fees, an appraisal, title and recording fees, and prepaid items. Together they often run roughly 2 to 5 percent of the loan amount, which is exactly why breakeven matters. Wend estimates these as a percentage of your balance so the verdict reflects the real cost, not just the rate.

Discount points are optional: you can pay a fee up front (one point is one percent of the loan) to buy your rate down a little. That lowers your payment but adds to your closing costs, which pushes your breakeven further out. Worth it only if you will stay long enough to earn the buy-down back.

A "no-cost" refinance does not mean free. The lender covers the closing costs in exchange for a slightly higher rate, or rolls the costs into your balance. It can be the right call if you might move before a normal breakeven, but you pay for it over time. Always compare the all-in cost, not just the headline rate.