When is the Best Time to Refinance a Mortgage?

The decision to refinance a mortgage loan can be a complicated one, as it depends on a variety of factors such as current mortgage rates, the remaining term of the loan, and the borrower's current financial situation. However, one of the most important considerations is the mortgage rate on the current loan compared to the rates that are currently available on the market.

The best time to refinance a mortgage is typically when current mortgage rates are lower than the rate on your current mortgage. By refinancing to a lower rate, you can potentially save thousands of dollars over the life of the loan. For example, if a borrower has a 30-year fixed-rate mortgage at 4.5% and mortgage rates drop to 3.5%, the borrower can save over $20,000 in interest over the life of the loan.

Another factor to consider when determining the best time to refinance is the remaining term of the loan. If you have several years left on your current mortgage, it may not make sense to refinance, as the savings from a lower mortgage rate may not be enough to offset the costs of refinancing, such as closing costs and appraisal fees.

Loan Type

Purchase Refinance with Cash out Refinance

State

Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District Of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming

FICO Score

Superior (780-850) Exceptional (760-779) Excellent (740-759) Very Good (720-739) Good (700-719) Above Average (680-699) Average (660-679) Fair (640-659) Need Improvement (620-639) Poor (350-620)

Loan Amount

$

Points

Up to 0 points Up to 0.5 points Up to 1 points Up to 1.5 points Up to 2 points Up to 2.5 points Up to 3 points

LTV

%

Loan Term

 15-Year Fixed  20-Year Fixed  30-Year Fixed  5-Year ARM  7-Year ARM  10-Year ARM

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The lenders whose rates and other terms appear on this chart are ICB's advertising partners. They provide their rate information to our data partner RateUpdate.com. Unless adjusted by the consumer, advertisers are sorted by APR from lowest to highest. For any advertising partners that do not provide their rate they are listed in advertisement display units at the bottom of the chart. Advertising partners may not pay to improve the frequency priority or prominence of their display. The interest rates, annual percentage rates and other terms advertised here are estimates provided by those advertising partners based on the information you entered above and do not bind. Any lender Monthly payment amounts stated do not include amounts for taxes and insurance premiums. The actual payment obligation will be greater if taxes and insurance are included. Although our data partner RateUpdate.com collects the information from the financial institutions themselves, the accuracy of the data cannot be guaranteed. Rates may change without notice and can change intraday. Some of the information contained in the rate tables including but not limited to special marketing notes is provided directly by the lenders. Please verify the rates and offers before applying for a loan with the financial institution themselves. No rate is binding until locked by a lender.

Lender

APR / Rate

Fees / Points

Payment

NMLS #1835285

5.440%

15-Year Fixed

5.250%

$5,000

Includes 0.750 points for $3,000

Lender Fees: $2,000

$3,216 /mo

Next >

NMLS #2059741

5.606%

15-Year Fixed

5.490%

$3,032

Includes 0.758 points for $3,032

Lender Fees: $0

$3,267 /mo

Next >

NMLS #757416

5.630%

15-Year Fixed

5.490%

$3,648

Includes 0.912 points for $3,648

Lender Fees: $0

$3,267 /mo

Next >

NMLS #1025894

5.650%

15-Year Fixed

5.490%

$4,172

Includes 0.868 points for $3,472

Lender Fees: $700

$3,267 /mo

Next >

NMLS #324599

License: 324599

5.673%

15-Year Fixed

5.500%

$4,570

Includes 0.875 points for $3,500

Lender Fees: $1,070

$3,269 /mo

Next >

NMLS #6606

5.773%

15-Year Fixed

5.625%

$3,848

Includes 0.962 points for $3,848

Lender Fees: $0

$3,295 /mo

Next >

NMLS #1835285

6.262%

5-Year ARM

6.125%

$5,860

Includes 0.965 points for $3,860

Lender Fees: $2,000

$2,431 /mo

Next >

NMLS #1835285

6.356%

30-Year Fixed

6.250%

$4,500

Includes 0.625 points for $2,500

Lender Fees: $2,000

$2,463 /mo

Next >

NMLS #324599

License: 324599

6.494%

30-Year Fixed

6.375%

$5,070

Includes 1.000 points for $4,000

Lender Fees: $1,070

$2,496 /mo

Next >

NMLS #2059741

6.569%

30-Year Fixed

6.490%

$3,292

Includes 0.823 points for $3,292

Lender Fees: $0

$2,526 /mo

Next >

NMLS #757416

6.590%

30-Year Fixed

6.500%

$3,744

Includes 0.936 points for $3,744

Lender Fees: $0

$2,529 /mo

Next >

NMLS #1025894

6.600%

30-Year Fixed

6.490%

$4,592

Includes 0.973 points for $3,892

Lender Fees: $700

$2,526 /mo

Next >

NMLS #6606

6.714%

30-Year Fixed

6.625%

$3,684

Includes 0.921 points for $3,684

Lender Fees: $0

$2,562 /mo

Next >

NMLS #401822

6.734%

30-Year Fixed

6.625%

$4,495

Includes 0.625 points for $2,500

Lender Fees: $1,995

$2,562 /mo

Next >

NMLS #324599

License: 324599

6.743%

5-Year ARM

6.625%

$4,954

Includes 0.971 points for $3,884

Lender Fees: $1,070

$2,562 /mo

Next >

NMLS #401822

7.698%

15-Year Fixed

7.375%

$8,000

Includes 1.000 points for $4,000

Lender Fees: $4,000

$3,680 /mo

Next >

Rate data provided by RateUpdate.com. Displayed by ICB, a division of Mortgage Research Center, NMLS #1907, Equal Housing Opportunity. Payments do not include taxes and insurance premiums. Actual payments will be greater with taxes and insurance included. Rate and product details.

In addition to the mortgage and remaining term, the borrower's current financial situation also plays a role in determining the best time to refinance. For example, if a borrower's credit score has improved since taking out the original loan, they may be able to qualify for a lower mortgage rate, making refinancing a more attractive option.

Additionally, if the borrower has built up more equity in the property, they may be able to qualify for a cash-out refinance, which could provide the funds needed for home improvements, debt consolidation, or other expenses.

Good Reasons to Refinance a Mortgage

Another situation where refinancing may be a good option is when you have an adjustable-rate mortgage (ARM) that is about to reset to a higher rate. If you expect your rate to rise significantly, refinancing to a fixed-rate mortgage may be a good choice to protect against future rate increases.

Another reason to refinance is to shorten the loan term. By refinancing to a 15-year mortgage instead of a 30-year mortgage, the borrower can save a significant amount in interest over the life of the loan. Additionally, with a shorter loan term, the borrower will build equity in the property more quickly.

In conclusion, the best time to refinance a mortgage is when mortgage rates today are lower than the rate on your current mortgage, when you have enough equity in your property, and when you have a good credit score. It is important to review your situation and to do some calculations to see if refinancing would benefit you. It's also good to consult with a lender to discuss the options available to you and to determine whether refinancing is the right choice for you.