How to Know When It’s the Right Time to Refinance

Refinancing Is About More Than Just Rates

Many homeowners think refinancing is only worthwhile when rates drop—but timing a refinance isn’t just about chasing numbers. It’s about aligning your mortgage with your bigger financial goals. Whether you want to lower your monthly payment, pay off your home faster, or tap into equity, knowing when to refinance starts with understanding why you want to refinance.

Look at Your Current Loan Situation

Start by reviewing your existing mortgage. How long have you had it? What’s your remaining balance? How much equity have you built?

If your loan is several years old or carries a higher rate than current averages, you could benefit from exploring new options. Even small adjustments—like reducing your rate by half a percent or shortening your loan term—can lead to significant savings over time.

Consider Your Goals

Refinancing can serve multiple purposes:

Lower monthly payments – to create breathing room in your budget.

Shorten your term – to pay off your home faster and save on interest.

Access home equity – for renovations, debt consolidation, or major expenses.

Remove private mortgage insurance (PMI) – if your home value has increased.

Your goals—not just rates—determine whether refinancing makes sense right now.

Calculate the Break-Even Point

Every refinance comes with closing costs, which can typically be rolled into the loan. To decide if it’s worth it, calculate your break-even point—how long it takes for your monthly savings to outweigh the upfront costs.

For example, if you save $250 per month and your costs are $3,000, you’ll break even in about 12 months. After that, every payment is pure savings. Your mortgage professional can help you calculate this precisely.

Think About Your Long-Term Plans

If you plan to stay in your home for several more years, refinancing sooner may make sense. The longer you stay after your break-even point, the more value you’ll gain.

However, if you anticipate moving in the near future, it may not be the right time. Refinancing should fit your timeline—not just your current payment.

Use a Rate Watch Strategy

Even if today isn’t the perfect moment, that doesn’t mean you should wait passively. Ask your mortgage professional to put you on a rate watch list. They’ll monitor the market and notify you when conditions align with your goals. This proactive approach keeps you ready to act the moment opportunity strikes.

Final Thoughts

There’s no one-size-fits-all answer to when you should refinance—but there is a right answer for you. When your refinance aligns with your financial goals, timeline, and comfort level, that’s the right time.

Talk with your mortgage professional today to review your options, understand your break-even point, and create a personalized plan that helps you make the most of your mortgage.