Should you refinance at 6.5%?

Q: Is 6.5% a good refinance rate?

It can be, but only if the new loan improves your total cost or helps a specific goal like payment relief, term change, or PMI removal. The deciding factor is whether you reach break-even before you plan to move or refinance again.

Q: How much lower does my rate need to be to refinance?

There’s no universal cutoff. What matters is how much the rate change lowers your payment and how long it takes to recoup closing costs. A smaller rate drop can still work if costs are low and you’ll stay long enough.

Q: How long should I stay in the home to break even?

At minimum, you should plan to keep the loan longer than the break-even month. If you expect to move sooner, refinancing usually won’t pay for itself.

Q: Do lender credits change whether refinancing is worth it?

Yes. Credits reduce upfront costs but typically raise the rate. Compare total costs and break-even for the credit option versus the lower-rate option before deciding.

Refinancing at 6.5% can be smart, but only if it improves your total cost or supports a clear goal like payment relief, a shorter term, PMI removal, or switching from an ARM to a fixed rate. The key is yourbreak-even timeline and whether you’ll keep the loan long enough to reach it.

You don’t need a spreadsheet to get a first answer—just a clean break-even check and a realistic time horizon.

If you want a quick reality check, run the numbers in the refinance calculator and compare your break-even point with your expected time horizon. You can also check today's rates for context on current offers.

At a glance

A 6.5% offer is promising if your current rate is meaningfully higher and fees are reasonable.
Break-even should land well before your likely move/refi window.
Term resets and points can quietly erase the benefit.

Run the refinance calculator Get rate alerts

Quick rule of thumb: If you won’t keep the loan past your break-even month, refinancing usually isn’t worth it.

Decision checkpoint: If the break-even is under 24 months and your rate drops by ~0.75% or more, refinancing at 6.5% often clears the bar. Longer break-even? Compare total interest carefully.

When refinancing at 6.5% can make sense

Your current rate is at least 0.75–1.0% higher and the closing costs are reasonable.
You can drop monthly payments to improve cash flow without extending the term too much.
You’re removing PMI because your equity is now above 20%.
You’re consolidating a second mortgage or HELOC into a single fixed payment.
You want to switch from an adjustable rate to a fixed rate for stability.
You can shorten your term and still handle the higher payment, cutting total interest.
You plan to stay in the home well beyond the break-even month.

When it usually doesn’t

Your rate is already close to 6.5% and the savings are minimal.
You plan to sell or refinance again before you break even.
Closing costs are high and you’re not getting meaningful lender credits.
The new loan resets the clock and increases total interest over time.
You’re stretching a 20-year balance back to 30 years without a clear cash-flow need.
You’re relying only on the monthly payment and ignoring total cost.

A simple way to decide (2-minute checklist)

Compare rates: New rate vs current rate.
Net closing costs: Fees minus credits.
Monthly change: Payment before vs after.
Break-even: Months to recover costs.
Time horizon: How long you’ll keep the loan.

Need help estimating break-even? Read the refinance break-even guide or review today’s rates before deciding.

Worked examples

Example A: Break-even in about 16 months

Loan balance of $310,000 at 7.4% refinanced to 6.5% with $3,200 in net closing costs. The payment drops by about $200 per month. Break even is roughly 16 months. If you plan to stay five years, it’s likely worth it.

Run this example in the refinance calculator →

Example B: Break-even in about 36 months

Loan balance of $420,000 at 6.9% refinanced to 6.5% with $5,400 in net closing costs. The payment drops by about $150 per month. Break even is roughly 36 months. If you’re moving in two years, it’s likely not worth it.

Run this example in the refinance calculator →

Common mistake: Assuming 6.5% is “good” without checking whether the break-even fits your timeline.

This is where most refinance quotes quietly go wrong.

Points vs. lender credits can flip the math

Paying points lowers the rate but increases upfront costs, while lender credits reduce cash due at closing but raise the rate. A lower APR can help compare offers, but it’s not perfect if you won’t keep the loan long enough.

Don’t rely only on the monthly payment—compare total costs and your time horizon to decide which option wins.

Frequently asked questions

Is 6.5% a good refinance rate?

It can be if it improves total cost or hits a goal like payment relief or PMI removal. The best test is whether you break even before you plan to move or refinance again.

How much lower does my rate need to be to refinance?

There isn’t a single threshold. Focus on how much the new payment changes and how quickly closing costs are recovered.

How long should I stay in the home to break even?

You’ll want to keep the loan longer than the break-even month. If you expect to move sooner, refinancing usually isn’t worth it.

Do lender credits change whether refinancing is worth it?

Yes. Credits can lower upfront costs but often raise the rate, so compare total cost and break-even with and without credits.

Should I wait for rates to drop instead?

If today’s offer doesn’t meet your break-even or goal, waiting can make sense. If it does, locking now can still be reasonable—set up rate alerts to monitor changes.

Ready to run your numbers?

Use the calculator to compare offers and see how long it takes to break even.