When should I consider refinancing my mortgage?

Consider refinancing when interest rates are at least 0.75% lower than your current rate, your credit score has improved, you want to change loan terms, remove PMI, or access home equity. Also consider if you plan to stay in the home long enough to recoup closing costs.

How much can I save by refinancing?

Savings depend on rate reduction, loan amount, and how long you keep the new loan. A 1% rate reduction on a $300,000 loan could save $250+ per month and $90,000+ over the loan life. Use our calculator to estimate your specific savings.

What are the costs associated with refinancing?

Refinancing costs typically range from 2-6% of the loan amount, including origination fees, appraisal, title insurance, and other closing costs. Total costs usually range from $2,000-$5,000 for most loans. Some lenders offer no-cost refinances with slightly higher rates.

What's the difference between cash-out and rate-and-term refinancing?

Rate-and-term refinancing changes your rate or loan term without taking cash out. Cash-out refinancing lets you borrow more than you owe and receive the difference in cash. Cash-out typically has higher rates and different qualification requirements.

What are the qualification requirements for refinancing?

Requirements include: credit score typically 620+ (740+ for best rates), debt-to-income ratio under 43%, sufficient home equity (usually 20%+ for conventional loans), stable employment, and adequate income documentation. Requirements vary by loan type and lender.

How long does the refinancing process take?

The refinancing process typically takes 30-45 days from application to closing. This includes time for application processing, appraisal, underwriting, and final approval. Streamline refinances may be faster, while complex situations may take longer.

How do I calculate the break-even point?

Divide total closing costs by monthly savings to find break-even in months. For example, $4,000 in costs divided by $200 monthly savings = 20 months to break even. If you plan to stay longer than the break-even period, refinancing likely makes sense.

Should I lock my interest rate?

Rate locks protect against rate increases during processing but prevent you from benefiting if rates drop. Most locks are 30-60 days. Lock when you're confident in proceeding and comfortable with the rate. Some lenders offer float-down options for a fee.

Mortgage refinancing guide

When and how to refinance your mortgage to save money, change terms or access your home's equity.

Current refinancing market

Refinancing can save thousands over the life of your loan when done strategically. Use the calculator below to see if it makes sense for you.

6.8%
30-year fixed rate: Current average; 0.75%
Rate drop to refinance: Minimum savings; 24-36
Break-even (months): Typical timeline; $3,000
Average closing costs: For refinancing

Refinance savings calculator

Current loan details

Current loan balance$350,000

$100K$1M

Current interest rate6.5%

3%10%

Current term

Home value$450,000

$100K$1.5M

Credit score740

580850

New loan details

New interest rate5.5%

3%10%

New term

Closing costs$8,000

$2K$20K

Frequently asked questions

When should I consider refinancing my mortgage?: Consider refinancing when interest rates are at least 0.75% lower than your current rate, your credit score has improved, you want to change loan terms, remove PMI, or access home equity. Also consider if you plan to stay in the home long enough to recoup closing costs.
How much can I save by refinancing?: Savings depend on rate reduction, loan amount, and how long you keep the new loan. A 1% rate reduction on a $300,000 loan could save $250+ per month and $90,000+ over the loan life. Use our calculator to estimate your specific savings.
What are the costs associated with refinancing?: Refinancing costs typically range from 2-6% of the loan amount, including origination fees, appraisal, title insurance, and other closing costs. Total costs usually range from $2,000-$5,000 for most loans. Some lenders offer no-cost refinances with slightly higher rates.
What's the difference between cash-out and rate-and-term refinancing?: Rate-and-term refinancing changes your rate or loan term without taking cash out. Cash-out refinancing lets you borrow more than you owe and receive the difference in cash. Cash-out typically has higher rates and different qualification requirements.
What are the qualification requirements for refinancing?: Requirements include: credit score typically 620+ (740+ for best rates), debt-to-income ratio under 43%, sufficient home equity (usually 20%+ for conventional loans), stable employment, and adequate income documentation. Requirements vary by loan type and lender.
How long does the refinancing process take?: The refinancing process typically takes 30-45 days from application to closing. This includes time for application processing, appraisal, underwriting, and final approval. Streamline refinances may be faster, while complex situations may take longer.
How do I calculate the break-even point?: Divide total closing costs by monthly savings to find break-even in months. For example, $4,000 in costs divided by $200 monthly savings = 20 months to break even. If you plan to stay longer than the break-even period, refinancing likely makes sense.
Should I lock my interest rate?: Rate locks protect against rate increases during processing but prevent you from benefiting if rates drop. Most locks are 30-60 days. Lock when you're confident in proceeding and comfortable with the rate. Some lenders offer float-down options for a fee.

Warren provides educational information, not individualized financial, tax or legal advice. Read our disclaimers.

By the numbers

What the data says

Week of October 30, 2025
6.17%
Average 30-year fixed mortgage rate
Down from 6.72% a year earlier
Source: Freddie Mac, Primary Mortgage Market Survey
September 2025
$415,200
Median price of an existing US home
Up 2.1% from a year earlier
Source: National Association of Realtors, Existing-Home Sales
November 2025
$2,424
Average annual home insurance premium for $300,000 of dwelling coverage
Source: Bankrate, Average Cost of Homeowners Insurance

National figures from the sources shown, as of the period on each card. They are context, not a forecast or advice for your situation.

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