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Refinancing your mortgage can save you thousands of dollars over the life of your loan, but timing matters. Here’s what you need to know to make the right decision.

The 1% Rule of Thumb

A common guideline is that refinancing makes sense when you can reduce your interest rate by at least 0.75% to 1%. However, this isn’t a hard rule — your break-even point depends on closing costs, how long you plan to stay in your home, and your remaining loan balance.

Key Factors to Consider

Current Interest Rates

Compare your existing rate with today’s market rates. Even a small reduction on a large balance can translate to significant monthly savings.

Your Credit Score

Your credit score directly impacts the rate you’ll qualify for. If your score has improved since you took out your original mortgage, you may qualify for a better rate.

Home Equity

Most lenders require at least 20% equity for the best refinance terms. If your home has appreciated in value, you may have more equity than you think.

How Long You’ll Stay

Calculate your break-even point by dividing your closing costs by your monthly savings. If you plan to move before reaching that point, refinancing may not make financial sense.

Types of Refinance Options

• Rate-and-term refinance: Lower your rate or change your loan term
• Cash-out refinance: Tap into your home equity for large expenses
• Streamline refinance: Simplified process for FHA or VA loans

Next Steps

Start by gathering your current loan details and checking today’s rates. A mortgage calculator can help you estimate your potential savings before you commit to the process.

This content is for informational purposes only and does not constitute financial advice. Consult with a licensed mortgage professional before making refinancing decisions.