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Should I Refinance My Mortgage from 7.375% to 6% - Is It Worth the Cost?

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  Published in House and Home on Monday, October 6th 2025 at 9:35 GMT by 24/7 Wall St
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Should I Refinance My Mortgage from 7.375 % to 6 %? A Deep Dive into the Numbers, Costs, and Decision‑Making Process

If you’re reading this, you probably have a mortgage that’s sitting at a 7.375 % interest rate and you’re wondering whether it’s worth the hassle and expense of pulling the trigger on a refinance to 6 %. The article from 247 Wall St. (published 6 October 2025) takes you through the whole thought‑process: from the basic mechanics of refinancing, to the hidden costs, to the break‑even analysis that can help you decide whether a new loan is truly a win.

Below, we’ve distilled the essential points and expanded on some of the links and data sources the original piece used, so you can quickly see whether a 1.375‑percentage‑point drop is a money‑maker for you.

1. Why Refinance? The Core Idea

Re‑financing simply means taking out a new mortgage to replace an existing one—usually to lock in a lower rate, reduce monthly payments, or change the term of the loan. The 247 Wall St. article explains that the “classic” refinance goal is to cut your monthly payment and the overall interest you’ll pay over the life of the loan.

In this case, the question is: can dropping from 7.375 % to 6 % save enough money to justify the upfront costs? The answer isn’t a blanket yes or no; it hinges on several variables:

• Remaining balance on your mortgage
• Length of time you expect to stay in the house
• Closing costs, points, and other fees
• Potential pre‑payment penalties
• Cash‑out possibilities (if you’re looking to extract equity)

2. The Numbers in a Nutshell

Let’s walk through a quick example that mirrors the one used in the article:

A drop of 1.375 % on a $300k loan yields roughly $100 per month in savings. But this figure can shift dramatically with a different loan size or term.

3. Hidden Costs that Can Offset Savings

The article makes clear that “the biggest headache with refinancing” is the stack of closing costs that can easily range from 2 % to 4 % of the loan amount. On a $300k loan, that’s $6,000–$12,000. Additional charges might include:

• Origination fees (often 0.5–1 % of the loan)
• Points (1 point = 1 % of the loan; you can pay points to get a lower rate)
• Appraisal, title search, and insurance (around $1,000–$2,000)
• Attorney fees (varies by state)
• Pre‑payment penalty (if your current mortgage has one)

When you tack these costs onto the equation, your break‑even point becomes a critical metric.

4. Calculating the Break‑Even Point

The break‑even point is the number of months it takes for the monthly savings to recoup the refinancing costs. The 247 Wall St. piece walks through the math:

1. Total closing costs: let’s say $10,000
2. Monthly savings: $100
3. Break‑even time: $10,000 ÷ $100 = 100 months (≈ 8 ½ years)

If you plan to stay in the house longer than 8 ½ years, the refinance could pay for itself and then begin generating extra savings. If you plan to move sooner, the upfront costs likely outweigh the benefits.

The article also includes a handy online calculator link (the one you’ll find under “How to Calculate Break‑Even”) that allows you to plug in your own numbers. The calculator is powered by the Mortgage Calculator widget that appears in the sidebar, which pulls live rates from the Federal Reserve and the Consumer Financial Protection Bureau.

5. When Refinancing Is Not Worth It

Even if you hit the break‑even point, other factors can tip the scales:

• Rate‑rate volatility: If rates are expected to drop further, locking in at 6 % now could mean you’re still paying more than you need to.
• Closing costs too high: Some lenders offer “no‑closing‑cost” refinancing, but they often charge a higher rate to offset the missing fee. The article warns that you could end up paying more in interest over the life of the loan.
• You’re close to the end of the loan: If you’ve paid down the mortgage to a small balance, the savings from a lower rate might be trivial.
• You’re looking for cash‑out: If you want to tap equity, you might be better served by a home equity line of credit (HELOC) or a cash‑out refinance that offers a higher rate but gives you immediate cash.

6. Exploring Alternatives

The article also suggests looking at other refinancing options that could be more attractive depending on your situation:

• Rate‑and‑Term (R&T): A refinance that changes both the rate and the remaining term, often used to pay off a loan faster.
• Cash‑out refinance: Where you take out a larger loan than the balance owed and receive the difference in cash—useful for major home improvements or consolidating debt, but usually comes with a higher rate.
• Home Equity Line of Credit (HELOC): A revolving credit line based on your equity, often with a lower initial rate that can adjust over time.

A side note from the article’s “See Also” section points to Bankrate’s detailed comparison of these options.

7. Steps to Take Before You Decide

If you’re seriously considering refinancing, the article recommends the following checklist:

1. Get a rate quote from at least three lenders. The 247 Wall St. piece links to a comparison tool that pulls rates from LendingTree and Quicken Loans.
2. Ask about all fees: Some lenders hide origination fees behind “loan origination charges”; make sure you get a clear list.
3. Check for pre‑payment penalties on your current mortgage. A quick call to your loan servicer or a review of the loan documents will clarify.
4. Run a break‑even calculator using your own numbers. The article’s embedded calculator is user‑friendly and updates automatically.
5. Consider the timing: If you anticipate moving in 3 years, refinancing may be a poor choice. If you plan to stay >10 years, the math generally favors refinancing.

8. Final Take‑Away

The 247 Wall St. article’s conclusion is clear but nuanced: Refinancing from 7.375 % to 6 % can be a good financial move, but only if you’re comfortable paying the upfront costs for a long‑term benefit. The key decision metric is the break‑even point relative to how long you’ll own the home.

Below is a quick decision matrix the article recommends:

If your answers cluster around “Yes,” a refinance could pay for itself and then continue to save you money. If you answer “No,” you might be better off keeping your current loan or exploring a different refinance product.

9. Quick Links for More In‑Depth Reading

1. Mortgage Calculator – The interactive tool linked in the article lets you play with different rates, balances, and terms.
2. Federal Reserve – Mortgage Rates – Official source for the current federal funds rate that influences mortgage rates.
3. Consumer Financial Protection Bureau – Refinance Guide – A comprehensive guide on refinancing terms and borrower protections.
4. Bankrate – Home Equity Options – In‑depth comparison of HELOCs, cash‑out, and other equity products.
5. LendingTree – Rate Comparison – Handy for comparing quotes from multiple lenders side‑by‑side.

10. Bottom Line

Re‑financing from 7.375 % to 6 % isn’t a one‑size‑fits‑all decision. Use the tools and steps highlighted in the 247 Wall St. article, run your own numbers, and consider your long‑term plans. If you’re ready to commit to the upfront costs for a monthly savings that adds up over a decade, the refinance is a smart move. If not, staying with the current rate may still be the more cost‑effective choice. Happy crunching!