Is Now a Good Time to Refinance?

With mortgage rates showing signs of easing in early 2026, many homeowners are wondering if now is the right time to refinance. The answer depends on several factors unique to your situation, including your current rate, how long you plan to stay in your home, and your financial goals.

When Refinancing Makes Sense

The traditional rule of thumb is that refinancing makes sense when you can lower your interest rate by at least 0.75 to 1 percentage point. However, this oversimplification ignores important factors like closing costs, loan term, and how long you plan to keep the mortgage.

• Rate reduction: If today's rates are significantly lower than your current rate, refinancing can reduce your monthly payment.
• Term reduction: Switching from a 30-year to a 15-year mortgage can save substantial interest over the life of the loan.
• Eliminating PMI: If your home has appreciated and you now have 20% equity, refinancing can remove PMI.
• Cash-out: Tapping equity for home improvements, debt consolidation, or other financial needs.

Always calculate your break-even point. If refinancing costs $4,000 in closing costs and saves you $200 per month, you will break even in 20 months. If you plan to stay in the home longer than that, it is likely worth it.