Refinancing $350,000 From 7% to 6%: Is It Worth It?
A full point off a $350,000 mortgage, with the term left alone. See how long the closing costs take to earn back and what changes if you move first.
Current loan balance $350,000 · Current interest rate 7% · Years left on current loan 25 years · +3 moreYour figuresEdit figures
What you still owe today
The rate you pay now
Years still to run
The rate you are offered
Years the new loan runs
Fees to complete the refinance
Break-even point
You earn the closing costs back in 28 months — refinance if you expect to keep this loan longer than that.
28 months to earn back the closing costs.
- Break-even point
- 28 months
- Monthly saving
- $219
- Lifetime interest saved
- $65,602
- Saving after closing costs
- $59,602
Over the years each loan still has to run, refinancing costs $59,602 less — and that is AFTER the $6,000 of closing costs.
| Scenario | Keep current loan | RefinanceBetter |
|---|---|---|
| Years still to pay | 25 | 25 |
| Monthly payment | $2,474 | $2,255 |
| Interest over those years | $392,118 | $326,516 |
| Closing costs | $0 | $6,000 |
| Interest + closing costs | $392,118 | $332,516 |
Method: Standard fixed-rate amortization, compared scenario against scenario
- Both loans are fixed rate with monthly compounding, and neither rate ever changes.
- The new loan equals your current balance: no cash taken out, and closing costs paid at settlement rather than rolled in.
- Property tax, hazard insurance and mortgage insurance are excluded, and no early payoff or missed payment is modelled.
- No tax table is used. Figures are estimates for comparison, not a lender quote or tax advice.
No tax rates are used in this calculation.
This is an estimate, not financial or tax advice. Confirm figures with the linked source or a licensed professional before acting on them.
Why this is the cleanest version of the refinance question
Dropping a $350,000 balance from seven percent to six while leaving twenty-five years on the clock is the version of this decision with the fewest moving parts. The term does not change, so the payment falls for exactly one reason: the rate. Nothing about the comparison depends on stretching the debt out, which means the monthly saving and the lifetime saving point in the same direction instead of arguing with each other. When people describe refinancing as obviously worthwhile, this shape is what they have in mind, and it is worth understanding precisely because so few real quotes look like it.
The whole decision therefore collapses into a single question you already know the answer to: will you still hold this loan when the accumulated savings have covered the six thousand dollars in fees? Every month you keep the loan past that point is money you keep. Every month short of it is money you spent to buy a benefit you never collected. The rate quote does not decide this. Your own plans do, and they are the input the lender never asks about.
Be honest about what stops the clock, because more things stop it than people expect. Selling the house stops it. Refinancing again when rates fall further stops it, and restarts the whole exercise with a fresh set of fees. Paying the balance off with an inheritance or a bonus stops it. A job that relocates you stops it. None of these are unusual, and a break-even that sits comfortably inside your realistic horizon survives all of them, while one that sits right at the edge is a bet on your own plans not changing.
One more thing this scenario makes easy to see. Because the term is unchanged, the lifetime interest figure in the result will move in the same direction as the monthly figure, and you can use it as a sanity check on any lender who tells you a different structure is better. If a competing quote lowers the payment further but lengthens the loan, compare its lifetime interest against this one rather than its monthly payment, and the two offers stop looking alike.
What a full point is actually worth at this balance
A percentage point is not a fixed amount of money. It is a fraction of whatever balance is still outstanding, so the same rate improvement is worth far more on three hundred and fifty thousand dollars than on a starter loan, and the fees do not scale with it in the same way. Title work, an appraisal and recording charges cost roughly what they cost regardless of loan size. That asymmetry is why a mid-size balance clears its costs faster than a small one at an identical rate improvement, and why blanket rules of thumb about how many points you need before refinancing are worth so little.
The other half of the picture is where you are in the amortization schedule. Twenty-five years remaining on a thirty-year loan means you are still early, and early payments are overwhelmingly interest rather than principal. A rate cut acts directly on the interest portion, so it bites hardest exactly here. The same cut applied with five years to run would change very little, because by then most of what you send each month is principal and the rate has almost nothing left to work on. Two borrowers can be offered the identical rate and be looking at genuinely different decisions purely because of where they sit on that curve.
So treat the six thousand dollars as the variable to negotiate rather than the rate. The rate is largely set by the market and your credit; the fee sheet is not, and lenders differ on it more than they differ on rate. Ask each one for a full itemised estimate, compare the line items rather than the headline, and re-run this page with the lowest credible fee total you can get in writing.
What closing costs include
The closing cost figure you enter should be everything you pay to get the new loan, whether it comes out of your pocket at settlement or is added to the balance. Typical components are the lender's origination or underwriting fee, discount points if you bought the rate down, an appraisal, a credit report, title search and title insurance, settlement or attorney fees, recording fees and any state or local transfer tax that applies to a refinance. On a mid-size loan the total commonly lands somewhere between two and five percent of the amount refinanced, which is why the break-even is measured in years rather than months.
Two items deserve care. A no-closing-cost refinance is not free — the fees are paid through a higher rate instead, so enter zero costs and the higher rate you were actually quoted, and compare that against the version with costs and the lower rate. And rolling the fees into the balance does not remove them either; it borrows them at the mortgage rate for the whole term. This calculator assumes the costs are paid at settlement and the new loan equals your current balance, so that the break-even figure is attributable to one thing at a time.
Prepaid interest, escrow deposits for taxes and insurance, and any refund of your old escrow account are transfers of timing rather than costs of the refinance, and are best left out of the number you enter here.
How to read your result
The headline is the number of whole months before the accumulated saving equals the closing costs, rounded up, because a partial month has not finished paying anything back. Compare it against your own horizon first. If you expect to keep the loan comfortably longer than the break-even, the refinance is doing what it is supposed to. If the two numbers are close, the decision is much finer than the rate difference makes it look, and small differences in the fee quote will decide it.
Beneath the headline, the monthly saving tells you how quickly the clock runs, and the two interest figures tell you what the whole loan costs under each scenario. If the lifetime interest saved is negative, read that as the price of the lower payment rather than as a reason to stop, and decide whether the cash flow is worth it.
Every figure here is an estimate from the six values you entered. It assumes a fixed rate on both loans, no cash taken out, no change to property tax, hazard insurance or mortgage insurance, and no early payoff. A lender's own quote will differ where any of those assumptions differ, and it is the written offer that governs. Change any input and the page recalculates immediately with no reload, and the link at the top of the result carries your scenario so you can send it to someone else and have them open the same numbers.
Frequently asked questions
Is a one percentage point drop enough to justify refinancing $350,000?
On a balance this size with twenty-five years still to run, a full point is a large improvement in absolute terms, because the saving is a fraction of a big outstanding balance while the fees are close to fixed. That does not make it automatic. Run your own fee quote through the calculator above and compare the break-even it reports against how long you genuinely expect to keep both the house and this loan, with room to spare rather than right at the edge.
Should I keep the same 25-year term or take a fresh 30-year loan?
Keeping the term is what makes this scenario clean: the payment falls only because the rate fell, so the monthly saving and the lifetime interest saving agree. Taking a fresh thirty-year loan would lower the payment further while adding five more years of interest accrual, which can reverse the lifetime figure entirely. If cash flow is tight the longer term may still be the right trade, but change one input at a time on this page so you can see exactly what each change bought you.
How is the refinance break-even point calculated?
Divide the total closing costs by the monthly saving, where the saving is your current principal and interest payment minus the payment on the proposed loan. The result is the number of months of lower payments needed before the accumulated saving equals what the refinance cost. This page rounds up to a whole month, because a partial month has not finished paying anything back, and it ignores what you could have earned on the fees had you invested them instead.
What if my monthly payment does not go down at all?
Then there is no break-even point, and this calculator says so in words instead of printing a zero or a negative month count. It usually happens when the new term is shorter than the years you have left, so the balance is compressed into fewer payments, or when the rate improvement is too small to offset that compression. A shorter term is not necessarily a bad deal, but it is not a cash-flow saving, so break-even is the wrong test for it.
Why can a lower payment still cost me more in the end?
Because resetting the term adds years of interest. Interest accrues on the outstanding balance every month it stays outstanding, so replacing twenty-two remaining years with a fresh thirty-year loan adds eight more years of it. That addition often exceeds everything the lower rate saved. The result on this page shows the interest under each scenario separately and the difference as a signed figure, so a negative saving is visible rather than hidden behind a smaller monthly number.
Should I include the closing costs if they are rolled into the loan?
Yes, enter them as closing costs. Rolling the fees into the balance does not make them disappear; it borrows them at the mortgage rate for the whole term, which costs more than paying them at settlement, not less. This calculator assumes the new loan equals your current balance and the costs are paid up front, so that the break-even figure can be attributed to one variable at a time. Treat a rolled-in quote as slightly optimistic here.
Is a no-closing-cost refinance a better deal?
It is the same deal priced differently. The lender covers the fees and recovers them through a higher interest rate over the life of the loan, so your break-even is immediate but your monthly saving is smaller and your lifetime interest is higher. Run the calculation both ways: once with zero costs at the higher quoted rate, once with the real costs at the lower rate, and compare the lifetime interest figures over the years you actually expect to stay.
How long do I need to stay for a refinance to be worth it?
Longer than the break-even point, with room to spare. If the calculation says thirty-one months and you might move in three years, the margin is too thin to be worth the disruption, since a sale or another refinance stops the clock and any unrealised months of saving simply never happen. As a rule of thumb, look for a break-even comfortably shorter than half the time you confidently expect to keep both the house and the loan.