Refinance Analysis

When Should You Refinance?

Understanding front-loaded interest and making smart refinancing decisions based on your situation.

The Front-Loaded Interest Trap

Mortgages are designed so you pay mostly interest in the early years. For a 30-year mortgage at 6.5%, you'll pay approximately:

  • Year 1-5:~85% of your payment goes to interest
  • Year 10:~75% still going to interest
  • Year 15:~60% to interest
When Refinancing Makes Sense

The BEST time to refinance is when you can "right-size" your mortgage:

  • ✓Shorten the term (30-year → 15-year)
  • ✓Lower rate by 1-2%+
  • ✓Payment stays affordable
  • ✓Break-even under 3-5 years
  • ✓Plan to stay in home 5+ years
Your Current Mortgage
Enter your existing mortgage details
$
Keep Current Mortgage
6.5% for 25 years
Monthly Payment
$3,038
Total Interest
$461,530
Total Cost
$911,530
Already Paid in Interest
$210,231
Refinance Option 1Same Term
Lower rate, same term length
Monthly Payment
$2,555
Save $483/mo
Total Interest
$469,818
Total Cost (with fees)
$924,818
Net Savings vs Current
-$13,288
Break-Even Time
11 months
Refinance Option 2Right-Size
Lower rate + shorter term
Monthly Payment
$3,442
+$404/mo more
Total Interest
$169,645
Total Cost (with fees)
$627,145
Net Savings vs Current
+$284,385
Payoff Time Saved
10 years
Refinancing Recommendation

Option 1Lower Rate, Same Term

While you save $483/month, you're restarting the interest amortization schedule. You've already paid $210,231 in interest, and most of your new payments will still go to interest in the early years. The total savings may not justify restarting the clock.

Option 2Right-Size Your Mortgage

This is the ideal refinance scenario! You're shortening your term to 15 years AND getting a 4.5% rate. Even though your monthly payment increases, you'll save $284,385 in total and own your home 10 years sooner. More of each payment goes to principal instead of interest.