TL;DR
Use a written break-even model and a lender payout quote before signing. Rate alone is not a refinance decision.
What this refinance service is designed to solve
Most costly refinance decisions come from incomplete math: borrowers compare new payment or new rate but skip penalty mechanics, legal and discharge costs, or realistic hold period assumptions.
Our refinance service turns that into one clear plan: estimate, validate, stress-test, and then decide only when downside scenarios still work.
Who this is for
- Homeowners considering refinancing before maturity to reduce long-run cost or improve cash flow.
- Borrowers evaluating debt consolidation where interest structure and risk can materially improve.
- Clients deciding between refinance, renewal, lender switch, blend, or waiting to maturity.
If you plan to sell or move soon, refinance can be weaker unless break-even happens well before your expected exit timeline.
The 6-input refinance worksheet
- Current mortgage balance and remaining term details.
- Penalty method and estimate: IRD, three-months interest, or higher-of formula.
- All transition costs: legal, appraisal, discharge, setup, and admin fees.
- New contract terms: payment, amortization, term, and rate structure.
- Monthly net benefit after all changes, not payment difference alone.
- Expected hold period and one downside scenario for rates or timeline.
Break-even month = total transition cost divided by monthly net benefit. If your likely hold period is shorter than break-even, the refinance case is usually weak.
Penalty reality: IRD versus three-months interest
IRD and three-months interest are different methods, and contract language determines which one applies. Many contracts apply the higher amount.
| Penalty concept | Why it matters | Practical action |
|---|---|---|
| IRD | Can materially increase fixed-term break cost | Validate lender method and comparable-rate assumptions in writing |
| Three-months interest | Often lower than IRD, but not guaranteed to be applied | Confirm your exact contract and payout statement before deciding |
| Payout quote timing | Quotes can change with time and rates | Request a current quote with validity dates before commitment |
Calculator estimate versus true break cost
Online calculators are useful for planning. They are not final lender payout quotes.
True break cost should include penalty method, quote validity timing, legal costs, discharge costs, appraisal requirements, and any lender-specific fees. We model these together so your decision is based on net benefit, not partial numbers.
Refinance alternatives you should compare first
| Path | Main upside | Main tradeoff |
|---|---|---|
| Refinance now | Immediate contract restructuring and potential payment or cost improvement | Penalty and fee stack must be recovered through break-even |
| Renew or switch at maturity | Can reduce or avoid break-cost friction | May delay savings if your current contract is weak today |
| Blend, extend, or privilege-first strategy | Can lower penalty exposure or improve flexibility | Complexity and lender-specific constraints vary |
| Wait and monitor | Avoid forced decision under poor timing | Opportunity cost if current contract remains expensive |
90-day refinance decision cadence
- Day 90-60: Collect contract details, estimate penalty range, and run baseline break-even.
- Day 60-30: Request lender payout quote and validate all-in closing cost stack.
- Day 30-14: Compare refinance against renewal, switch, and wait scenarios with downside testing.
- Day 14-0: Proceed only if downside-case break-even still aligns with your hold period and risk tolerance.
Behavior traps that cause expensive refinance outcomes
| Mental model | Common trap | Pragmatic correction |
|---|---|---|
| Anchoring | Fixating on advertised rate and ignoring total cost stack | Require a written all-in comparison before approval |
| Present bias | Overweighting immediate payment relief and underweighting break cost | Model monthly and 24/60-month outcomes side-by-side |
| Confirmation bias | Seeking only inputs that support refinancing now | Force one strong counter-case: wait, renew, or switch later |
| Regret aversion | Delaying decision due to fear of making the wrong move | Use a rules-based threshold: proceed only if downside case passes |
Sources
Best next step
- Run the refinance analyzer and refi break-even using your actual balance and timeline.
- Estimate penalty exposure, then request your lender payout quote before final decisions.
- Start your refinance plan with a single document package and service-specific review.
