Rate reduction
A lower rate can reduce interest cost or payment, but costs and loan term still matter.
Rate-and-term refinance
A lower payment is not the only measure of a better refinance.
Rate-and-term refinancing typically changes the mortgage rate, term, or structure without primarily using the transaction to extract equity.
Term change
Moving from a 30-year to a shorter term can increase payment while potentially reducing long-term interest.
Payment reduction
Restarting a longer term may reduce the payment even if the interest savings are less significant.
Closing costs
Refinance costs should be included in the break-even analysis.
Remaining balance
Compare the future principal balance under both the existing and proposed loans.
Time horizon
The refinance economics should match how long you expect to keep the property and loan.