My Mortgage Rate Is 6.5%. Should I Refinance?
Whether refinancing from 6.5 percent saves money comes down to the new rate, the closing costs, and how long you keep the new loan. A small rate drop can take years to recoup while a larger drop pays for itself quickly. Enter your details and proposed rate above to see your break-even month.
Now, and the offer
—
around —
- Payment now
- $0.00
- Payment after
- $0.00
- Saved each month
- $0.00
- Closing costs
- $0
- Interest over the full life
- $0
—
A positive lifetime figure means the new loan costs more in total interest even though the monthly payment fell — usually because the term restarted. Both numbers matter.
What a Rate Drop From 6.5 Percent Actually Saves
On a $300,000 balance at 6.5 percent over 30 years, the monthly principal-and-interest payment is approximately $1,896. Refinancing to an illustrative 5.5 percent drops that payment to about $1,703 — a monthly saving near $193. With $6,000 in closing costs, the break-even point lands around 31 months, just under three years.
A smaller drop to 6.0 percent saves roughly $97 per month on the same balance. Break-even stretches to about 62 months — more than five years. If you expect to sell or refinance again before that horizon, the closing costs outweigh the savings.
These numbers shift with the remaining balance. A borrower ten years into a $400,000 original loan has a lower balance, which reduces both the payment savings and the total interest benefit. That is why the calculator asks for your current balance, not the original loan amount.
Beyond the Monthly Payment
Monthly savings are the most visible benefit, but total interest over the remaining term is the fuller measure. Dropping from 6.5 to 5.5 percent on a $300,000 balance with 25 years left can save well over $50,000 in cumulative interest — a figure that far exceeds the closing costs once you pass the break-even point.
Resetting the clock matters, though. Refinancing into a new 30-year term lowers the payment further but stretches the amortisation timeline, potentially increasing total interest even at the lower rate. A shorter replacement term — such as a 30-to-15-year refinance — avoids that trap at the cost of a higher monthly payment.
If closing-cost cash is tight, a no-closing-cost refinance trades a slightly higher rate for zero upfront outlay. The general refinance decision tool models all of these scenarios side by side.
Payment examples use illustrative rates on a $300,000 balance. Your actual savings depend on the rate and terms your lender offers.