Key takeaway
Refinancing a 30-year mortgage from 7% to 6% saves $197.26/month on $300K ($71,012 lifetime interest), $263.01/month on $400K ($94,683), and $328.76/month on $500K ($118,354). With typical $8,000 closing costs on the $400K loan, cash-flow breakeven is about 30 months — but counting the faster equity buildup, the all-in breakeven is about 24 months. Sell or refinance again before roughly month 24 and the refi loses money.
Where rates actually are: Freddie Mac's weekly survey averaged 7.32% for a 30-year fixed loan the week of October 22, 2026 — so a 6% refinance quote today would be more than a full point below the national purchase-loan average, not a typical offer. Treat the table below as the value of a one-point drop whenever you are actually quoted one, and run your real quote in the analyzer.Source: Freddie Mac, Primary Mortgage Market Survey, October 22, 2026
Run your own numbers
Our free Refinance Analyzer compares your current loan against a refinance quote — payment, total interest, and breakeven month.
The savings table: 7% vs 6% on a 30-year fixed
Principal and interest only — taxes, insurance, and PMI are unchanged by a refinance. Lifetime interest assumes you hold the full 30 years.
| Balance | 7% payment | 6% payment | Monthly savings | Yearly savings | Lifetime interest saved |
|---|---|---|---|---|---|
| $300,000 | $1,995.91 | $1,798.65 | $197.26 | $2,367 | $71,012 |
| $400,000 | $2,661.21 | $2,398.20 | $263.01 | $3,156 | $94,683 |
| $500,000 | $3,326.51 | $2,997.75 | $328.76 | $3,945 | $118,354 |
The number that actually decides: breakeven
The rate drop is only half the deal — closing costs are the other half. Divide what the refinance costs by what it saves each month:
$8,000 in closing costs ÷ $263.01/month = 30.4 months.
That is the cash-flow breakeven: about 2.5 years until the lower payments alone have recouped the closing costs. But there's a second number that matters more: the all-in (equity-adjusted) breakeven — the first month your total position, counting both the payment savings and the lower remaining balance, is better with the refi than without it. Because the 6% loan amortizes faster, that lands around month 24 — six months before the cash-flow breakeven.
Sell or refinance again at month 18 and you paid $8,000 to save roughly $4,734 in payments plus about $1,277 of extra equity — still roughly $1,990 short all-in. This is why "should I refinance" is really "how long will I keep this loan," and why no-closing-cost refis (which trade a slightly higher rate for zero upfront cost) can win for short horizons. One caveat: this example assumes the same starting balance and term — a real refinance that resets your loan clock pushes the all-in breakeven back out, which is why our Refinance Analyzer shows both breakevens on your actual numbers. See when to refinance your mortgage for the full breakeven framework.
Watch the clock reset
A new 30-year loan restarts amortization at month one, when payments are mostly interest. If you are 10 years into a 7% mortgage, you have already survived the interest-heavy years — refinancing into a fresh 30-year 6% loan lowers the payment but sends you back to interest-heavy payments and extends the payoff date by a decade. The honest comparison is total interest remaining on your current loan versus total interest on the new loan, not just the monthly payment. Ask your lender to quote a 25-year or 20-year term alongside the 30-year; the payment is higher but the lifetime savings are dramatically larger and the clock does not fully reset. Run both clocks in the Mortgage Payoff calculator — it shows your payoff date and total interest on the loan you have, and what extra principal does to each.
When the savings get even bigger
The table assumes a full 1% drop, but the math scales: a 1.5% drop saves roughly 50% more per month, and larger balances multiply everything. Two more levers stack on top of the rate cut: extra principal payments (even $200/month extra on the refinanced loan cuts years off the term) and discount points bought at closing (which only pay if you stay past their own breakeven). Run all three together in the analyzer before you sign.
Bottom line
One point of rate is worth about $66 per month per $100,000 borrowed — $263/month on $400K. That is real money, but the refinance only wins if you stay past the all-in breakeven (about 24 months at typical costs in this example — 30 months on payment savings alone) and you compare total remaining interest, not just the payment. Short horizon? The rate cut probably is not worth the fees.
Related calculators
- Refinance Analyzer — your current loan vs. a refinance quote, with breakeven.
- When to Refinance Your Mortgage — the full breakeven framework and rate-drop rules of thumb.
- Are Mortgage Discount Points Worth It? — points breakeven math for the closing table.
- Mortgage Recast Explained — lower your payment without refinancing: keep your rate, cut the payment with a lump sum.
- Extra Mortgage Payments — what $200/month extra does to the refinanced loan.
Frequently asked questions
How much does refinancing from 7% to 6% save on a $400,000 mortgage?
Principal and interest drop from $2,661.21 to $2,398.20 per month — $263.01/month, $3,156 per year, and $94,683 in total interest over 30 years. With $8,000 in closing costs, breakeven is about 30 months.
How long does it take to break even on refinance closing costs?
Divide closing costs by monthly savings: $8,000 ÷ $263/month ≈ 30 months (2.5 years) of cash-flow breakeven for a $400K refi from 7% to 6% — but the all-in breakeven, counting the lower remaining balance, is about 24 months. Sell or refinance again before roughly month 24 and the refi loses money; every month after, your total position is better with the refi.
Is it worth refinancing if I might move in a few years?
Only if you stay past the all-in breakeven (about 24 months; 30 months on payment savings alone). At $8,000 in costs and $263/month saved, moving at month 18 means paying $8,000 to save about $4,734 in payments plus roughly $1,277 of extra equity — still about a $1,990 shortfall all-in. Shorter horizon means closing costs matter more than the rate drop.
Does refinancing restart my mortgage clock?
A new 30-year loan resets amortization to month one (interest-heavy payments). Compare total interest remaining on your current loan versus total interest on the new loan — not just the monthly payment — and consider a 25- or 20-year term to avoid fully resetting the clock.
Last updated: October 25, 2026