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Savings from a 1% drop (30-year to 30-year)
| Loan | 7% → 6% savings/mo | Costs at 2% of loan | Break-even |
|---|---|---|---|
| $150,000 | $99 | $3,000 | 31 months |
| $200,000 | $132 | $4,000 | 31 months |
| $300,000 | $197 | $6,000 | 31 months |
| $400,000 | $263 | $8,000 | 31 months |
| $500,000 | $329 | $10,000 | 31 months |
| $750,000 | $493 | $15,000 | 31 months |
Closing costs at 2% of the loan are an illustrative assumption, not a quote; enter your own in the calculator.
When 1% is not worth it
- You plan to move before the break-even month.
- The loan is small, so savings are small but some fees are fixed.
- You are far into your current loan and the new term adds many years.
When less than 1% can be worth it
On large balances with low costs, even a half-point drop can pay back within a couple of years. The break-even math decides, not a fixed rule.
Example rates are for comparison only, not offers or current quotes. Your rate depends on credit, loan-to-value and lender.
Related
Frequently asked questions
Is it worth refinancing to save 1%?
Often, if you will keep the loan past the break-even month. On $300,000 it saves about $197 a month.
What is the rule of thumb for refinancing?
The old “1% rule” is a rough guide. Calculate the break-even on your actual costs instead.