Refinancing typically makes sense when you can lower your interest rate by at least 0.5-1%, plan to stay in the home long enough to recoup closing costs (usually 2-5 years), or want to switch from an adjustable-rate to a fixed-rate mortgage. Calculate your break-even point by dividing closing costs by the monthly savings to determine if refinancing is worthwhile.

Refinance closing costs typically range from 2% to 5% of the loan amount, covering appraisal fees, title insurance, origination fees, and other charges. On a $250,000 refinance, that's $5,000 to $12,500. Some lenders offer no-closing-cost refinances, but they usually compensate by charging a slightly higher interest rate.

When you refinance, you're replacing your existing mortgage with a new one based on your remaining loan balance—there's no down payment like a purchase. The home price field represents your current loan balance that you're refinancing. Your existing equity in the home serves the same role as a down payment for qualification purposes.