Monthly payment side-by-side: 5% vs 6%
One percentage point sounds almost trivial when you see it on a rate sheet. In absolute dollars, it is anything but. Here's the monthly payment comparison across common loan sizes:
| Loan Amount | 5% Payment | 6% Payment | Monthly Difference |
|---|---|---|---|
| $200,000 | $1,074 | $1,199 | $125 |
| $250,000 | $1,342 | $1,499 | $157 |
| $300,000 | $1,610 | $1,799 | $189 |
| $350,000 | $1,879 | $2,098 | $219 |
| $400,000 | $2,147 | $2,398 | $251 |
| $500,000 | $2,684 | $2,998 | $314 |
At $300,000, the gap is $189/month. That's a car insurance premium, a week of groceries, or a healthy contribution to your kid's college fund. At $500,000, it's $314/month — enough to fund a Roth IRA contribution every single month with cash to spare.
Total interest over 30 years: where it gets painful
Monthly differences are noticeable. Lifetime differences are the ones that change your retirement date.
📊 Total interest paid — 5% vs 6% over 30 years
On a $400,000 loan, that one percent costs you $90,320 over 30 years. To put it in perspective: that's more than many people save for retirement in their entire 20s. It's a down payment on a second property. It's 4+ years of maxing out a 401(k). All from one percentage point.
Should you refinance from 6% to 5%?
If rates have dropped and you're currently at 6%, the question is straightforward math: does the monthly savings justify the refinancing costs?
On $300,000, 6% to 5%: You save $189/month. Typical closing costs run $4,000-$7,000 for a refinance. Break-even: 21-37 months. If you plan to stay in the home 3+ years, refinancing pays for itself and then some. After break-even, every month is $189 you keep.
On $200,000, 6% to 5%: You save $125/month. Break-even: 32-56 months. Still worth it if you're staying 4-5+ years, but the case is tighter. Don't refinance a small balance if you're moving soon.
The 6% vs 7% comparison shows the gap at higher rate tiers. The refinance vs overpay guide helps you decide whether refinancing or extra payments is the better strategy. For exact overpayment math, the $200 extra payment guide shows savings at current rates. And our overpayment calculator lets you model any scenario.
For live rate tracking, Freddie Mac's PMMS publishes weekly national averages. The Federal Reserve H.15 release provides historical rate context.
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