When should I refinance?

If you can save money in any form, then it’s a good time to refinance.


The longer answer is it depends on your financial situation, your long-term financial goals [related post: Why should I refinance?], your loan amount, your location, and the current economy. Economic recessions like those of 2008, 2016 and 2020, for instance, led to refinancing booms because of the record low mortgage interest rates nationwide.

But generally speaking, if refinancing will save you money, then you should definitely refinance.

To calculate whether or not refinancing will save you money, you will need to add up the total costs of refinancing (like appraisal, origination fees, and closing costs), find out what new interest rates you qualify for, and then see if your new monthly savings outweigh the costs. Note that you can request to include the closing costs into the new loan amount. Depending on how much your current mortgage payments cost, a new interest rate that’s even just .25% or .75% lower can make a significant difference. Also consider whether a refinance or cash-out refinance would be more beneficial for your situation.

If you can break even (pay off the costs to refinance) in under a couple years, and are planning to stay in your home for longer than that, refinancing is a good decision.

Keep in mind that mortgage rates are constantly changing in accordance with demand, treasury bond rates, and the overall economy. A good rate one morning might be bad by the evening.

Our recommendation is to check the numbers, see what new rates you qualify for, and if you like that new rate — lock it in before it changes.