Answers · Refinancing
Should I refinance at 7%?
Updated June 2026 · All math shown, no assumptions hiddenUsually worth a serious look. Dropping from 7.0% to ~6.25% on a $400,000 balance saves about $198/month and breaks even on ~$7,000 of closing costs in about 35 months. If you'll keep the home longer than that, refinancing wins. The four inputs that decide it: your balance, the rate gap, closing costs, and how long you'll stay.
The worked example
A $400,000 balance on a 30-year fixed:
| Rate | Monthly P&I | Savings vs 7.0% | Breakeven on $7k costs |
|---|---|---|---|
| 7.000% | $2,661 | — | — |
| 6.250% | $2,463 | $198/mo | ~35 months |
| 6.000% | $2,398 | $263/mo | ~27 months |
| 5.750% | $2,334 | $327/mo | ~21 months |
breakeven months = closing costs ÷ monthly savings
When refinancing at 7% is clearly right
- You'll stay past breakeven. Selling in two years kills a 35-month breakeven deal.
- The rate gap is 0.75% or more. Below that, closing costs eat most of the win on typical balances.
- Your balance is large. Savings scale with balance; a $600k loan makes a small gap worthwhile, a $150k loan often doesn't.
When waiting is smarter
- The gap is under ~0.5%. On $400k that's ~$130/mo against $7k of costs — a 4.5-year breakeven.
- You might move soon. Breakeven math is unforgiving about this.
- Resetting the clock costs you. A fresh 30-year term lowers payments but can raise lifetime interest — compare a shorter term too.
The trap: timing the bottom
Nobody refinances at the bottom on purpose. The practical move is to know your number in advance — the exact rate at which switching beats staying after fees — and act when the market crosses it. That's a daily-checking job, which is exactly what software is for.
Don't watch rates. Have them watched.
Assign a free agent to your loan. It checks lender pricing against your numbers every day and alerts you once — when the math actually works.
Assign my agentFigures are illustrative principal-and-interest math at the stated rates and terms; they exclude taxes, insurance, and PMI, and are not a loan offer or financial advice. Your actual rates and fees depend on qualification with lenders.