DECISION GUIDE

Prepay your mortgage or refinance?

Prepaying keeps the existing loan but lowers its balance. Refinancing replaces the loan and may change the rate, term, payment, closing costs and cash needed at closing. They solve different problems.

Compare the full cost

Estimate interest remaining on your existing loan, then compare the result with a refinance offer including closing costs and the length of time you expect to keep the home. A lower monthly payment alone does not prove a refinance costs less.

Use the same assumptions

Do not compare a 30-year new loan with a shorter remaining term without noticing the extra years. Enter realistic extra payments in each scenario and keep an emergency reserve.