Purchase
Compare rate against points and lender credits, and see what each combination does to the payment and the cash you need at closing.
- Home
- Mortgage & Refinance
Read the whole cost, not just the rate
Purchase, refinance and cash-out options compared on rate, points, closing costs and the break-even point that decides whether a refinance is worth doing at all.
Why this is hard to compare
The problem
A quarter-point difference in rate is easy to see. Points, lender fees and the length of time you plan to keep the loan are harder, and they frequently matter more. The question a refinance turns on is how many months it takes for the lower payment to repay the cost of getting it -- and whether you will still hold the loan by then.
What is on the table
Rate-and-term refinance
Lower the rate or shorten the term. The test is the break-even month, not the rate on the flyer.
Cash-out refinance
Convert equity to cash and reset the loan. Weigh the new rate on the whole balance, not just the amount withdrawn.
Fixed against adjustable
Fixed buys certainty. Adjustable can win over a short hold, and costs you if the hold turns long.
Side by side
What to put side by side
| Line item | Why it matters | Easy to miss |
|---|---|---|
| Interest rate | Sets the payment | Quoted with points baked in |
| Points | Cash today for a lower rate | Only pays off over a long hold |
| Closing costs | Cash needed to complete | Sometimes rolled into the balance |
| Break-even month | When a refinance turns profitable | Rarely shown on a quote |
Ready to see the numbers?
Purchase, refinance and cash-out options compared on rate, points, closing costs and the break-even point that decides whether a refinance is worth doing at all.
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