Look beyond the new monthly payment
A refinance can lower the payment because of a lower rate, a longer term, or both. Extending the term can create immediate monthly relief while increasing the number of years you remain in debt, so compare remaining interest on the current loan with the projected interest and costs of the new loan.
Closing costs may be paid in cash or, in some transactions, added to the new loan balance. Rolling costs into the loan reduces upfront cash but means financing those costs over time.
Use the break-even point as a planning tool
The break-even point is a useful first screen, not a complete recommendation. It does not capture every tax consequence, opportunity cost, loan feature, or future life change. Use it to identify whether a refinance deserves a closer look, then compare actual Loan Estimates from lenders.
Also consider your remaining term. Replacing a loan with 20 years left with a fresh 30-year loan can lower the payment while extending repayment by a decade unless you voluntarily continue paying more.