← Guides · November 9, 2026
When Does Refinancing Pay Off? A Worked Example
Take a $300,000 balance with 27 years left at 7.25%. The payment is about $2,113. Refinancing to a new 30-year loan at 6.25% with $6,000 in closing costs gives about $1,847.
- Monthly savings: about $265
- Break-even: $6,000 ÷ $265 ≈ 23 months
If you stay seven years, the net gain after costs and remaining balances is meaningful. If you move in a year, refinancing loses money.
Two cautions
- A longer term can raise total interest even while the payment falls.
- Lenders quote rates with points; include them in closing costs.
Check your own numbers in the calculator.