How do I know if refinancing is worth the closing costs?

Refinancing only pays off if you stay in the home long enough to recover the closing costs through your monthly savings. Calculate the break-even by dividing total refinance costs by your monthly payment savings: if it costs $6,000 to refinance and you save $250 a month, you break even in 24 months. If you'll keep the loan well beyond that, it's likely worth it; if you might move or refinance again sooner, it may not be. Don't just chase a lower rate – watch out for resetting your term back to 30 years, which can increase lifetime interest even at a lower rate. Also weigh rolling costs into the loan versus paying out of pocket. Plug your numbers into wealthserene.com/tools/refinance-analyzer to see your personal break-even before committing.