Should You Refinance a $250,000 Mortgage?
Dropping from 6.5% to 5.5% on $250,000 cuts the payment by $269 a month and breaks even in 11 months.
On a $250,000 balance with 25 years left at 6.5%, you are paying $1,688 a month. Refinancing into a 30-year loan at 5.5% brings that to $1,419 — a saving of $269 every month. Closing costs of $3,000 mean you are ahead after 11 months, so the move pays off if you stay in the house longer than that.
Watch the lifetime number as well as the monthly one. Restarting the clock at 30 years spreads the balance over longer, so total interest goes from $256,405 to $261,010. The calculator below is set to this scenario — change the new term to 25 years to keep your original payoff date, or enter the actual rate you were quoted.
Results
Monthly Payment Savings
$421.30 / month
Net Lifetime Savings: $47,389 · Break-Even Period: 8 months
Monthly Payment Comparison
Total Interest & Cost Comparison
Refinancing $250,000 — saving by new rate
From 6.5% with 25 years left, into a 30-year loan, with $3,000 in closing costs paid up front.
| New rate | New payment | Monthly saving | Break-even |
|---|---|---|---|
| 4.5% | $1,267 | $421 | 7 months |
| 5% | $1,342 | $346 | 9 months |
| 5.5% | $1,419 | $269 | 11 months |
| 6% | $1,499 | $189 | 16 months |
| 6.5% | $1,580 | $108 | 28 months |
Frequently Asked Questions
- Going from 6.5% to 5.5% takes the payment from $1,688 to $1,419 — $269 a month, or $3,223 a year. Against $3,000 of closing costs you break even in 11 months. A smaller rate drop still helps: at 6% the saving is $189 a month.
- On a balance this size, usually yes. One point off 6.5% on $250,000 is worth about $269 a month, which clears typical closing costs within a couple of years. The old "you need 2%" rule dates from when balances were smaller — what actually matters is your break-even point against how long you plan to stay.
- At $3,000 in costs and $269 a month saved, 11 months. Sell or refinance again before then and the move cost you money. If you are unsure how long you will stay, ask your lender about a no-closing-cost refinance — the rate is higher but there is nothing to recoup.
- Only if you choose a 30-year term. Refinancing $250,000 back to 30 years lowers the payment most but raises total interest to $261,010 versus $256,405 on your current path. Refinancing into a 25-year term instead keeps your original payoff date: the payment becomes $1,535 and lifetime interest drops to $210,566.
Refinance savings by loan balance
Loan balances