Is Now a Good Time to Refinance?

April 04, 2025•2 min read

Consider Your Future Plans

The most important factor in deciding whether to refinance is your long-term plans with the home. If you plan to stay in the home for several years, refinancing could be a great way to lower your interest rate, reduce your monthly payment, or access home equity. However, if you’re planning to move soon, the cost of refinancing may outweigh the benefits.

Calculate Your Break-Even Point

Refinancing isn’t just about getting a lower rate—it’s about ensuring the savings outweigh the costs. To determine if refinancing makes financial sense, calculate the break-even point by dividing the total closing costs by your expected monthly savings.

For example, if closing costs are $5,000 and refinancing saves you $200 per month, your break-even point is 25 months. If you plan to stay in the home longer than that, refinancing could be a smart move.

Use Refinancing to Consolidate Debt

Refinancing can also be an effective strategy for debt consolidation. If you have high-interest debt, such as credit cards or personal loans, a cash-out refinance allows you to use your home’s equity to pay off those balances. This can lower your overall interest rate and simplify your monthly payments.

Other Reasons to Refinance

Beyond lowering your rate or consolidating debt, refinancing can help you:

Shorten your loan term to pay off your mortgage faster.
Switch from an adjustable-rate mortgage (ARM) to a fixed-rate for stability.
Remove private mortgage insurance (PMI) if you’ve built enough equity.

Final Thoughts

Refinancing can be a great financial move, but it depends on your long-term goals, the costs involved, and how much you’ll save. Before making a decision, speak with a mortgage professional to explore your options and see if refinancing is right for you.