With mortgage rates hitting an 11-month low in 2025, many homeowners are wondering if now is the right time to refinance. Lower rates can mean reduced monthly payments, shorter loan terms, or cash for home upgrades—but refinancing isn’t right for everyone.
Here’s what you need to know before deciding whether a refinance mortgage in 2025 makes sense for you.
1. Understand Where Mortgage Rates Stand
Rates are currently hovering around 6.5%, which is significantly lower than last year’s peaks. If your existing mortgage rate is above 7%, refinancing could save you thousands over the life of your loan.
2. Calculate Your Break-Even Point
Refinancing isn’t free—you’ll typically pay closing costs between 2% and 5% of your loan balance. Use this formula to calculate your break-even point:
Break-even = Closing Costs ÷ Monthly Savings
If you plan to stay in your home longer than the break-even period, refinancing could be a smart move.
3. Consider a Shorter Loan Term
Switching from a 30-year loan to a 15-year mortgage can help you pay off your home faster and save on total interest—even if your monthly payment goes up slightly.
4. Tap Into Home Equity Strategically.
With U.S. homeowners holding an average of $311,000 in equity, cash-out refinancing can be an option for:
- Major renovations
- Debt consolidation
- Investment opportunities
However, be cautious about borrowing against your equity unless it directly improves your financial position.
5. Shop Around for the Best Deal
Get quotes from at least three lenders. Compare:
- Interest rates
- Closing costs
- Term options
Sometimes your current lender will offer incentives to keep your business, so it’s worth asking.
Call to Action
Thinking about a refinance mortgage in 2025? It may be the right time to review your options and see how much you could save. Contact me today for referrals to lenders and mortgage brokers. personalized consultation.
