Yes, if you don’t make extra or larger payments to pay off the loan in the originally scheduled time frame, you can pay more interest. Your principal and interest rate are both lower on your refi, but the overall time you’re borrowing money is longer. You’ll generally pay more interest on a longer-term loan.
The monthly payment on your refi will be less than your original loan, both because of the lower interest rate and the lower principal (the principal is lower because you’ve paid some of the principal off with your monthly payments).
If you increase your monthly payment on your refi to equal the payment on your original loan, your loan should be paid off before the original loan was scheduled to be paid off because your interest rate is lower (resulting in more principal being paid off with each payment than on the original loan).
If you increase your payment on your refi to the amount required to pay off your refi at the time the original loan was to be paid off, that monthly payment should be less than the original loan because of the lower interest rate.
None of that takes into account closing costs or points.
If you take either of those options, you should pay less in total interest than you would’ve on the original loan. If you don’t at least make some extra payments, you’ll likely pay more interest overall. Scenario:
If you borrow 100k at 5% for 15 year, your payments will be 790.79.
If you keep that loan for 15 years, you’ll pay $42,342 in interest. After 5 years, your principal will be $74557. You will have paid $22,004.73 in interest to that point. Now your loan is the same as a $74557 loan for 10 years at 5%. If you refinance that into a 15-year loan at 4.9%, now you have a $74557 loan for 15 years. Your payments will be $585.72. Your interest over the life of the refi loan will be $30871.79. You will pay an extra $10533.67
in interest ($22004.73 for the first loan,+$30871.79 on the second loan,-$42342.85 you would’ve paid if you’d kept the first loan).
So, if your goal is to pay less interest, then you should consider making extra payments on your refi. If you have some other goal (smaller payments, cash out, etc), then maybe you don’t need to make extra or larger payments.
