refinance
When does refinancing your mortgage make sense?
Dec 01, 20255–7 min read
A practical overview of situations where refinancing may help – and when it may not be the right move.
Refinancing is not always a simple yes or no
Many advertisements suggest that refinancing is always a good idea if rates are lower. In reality, it depends on your costs, your time horizon and your overall plan.
Situations where it may help
- You plan to stay in the home long enough to recover the closing costs.
- Your credit profile has improved and you now qualify for a better rate.
- You want to move from an adjustable-rate mortgage to a fixed rate for stability.
- You have a clear goal, such as paying off the loan faster by shortening the term.
Situations where caution is important
- You only want a lower payment but extend the term so much that you pay far more interest.
- You are adding more debt on top of existing balances without a plan to reduce it.
- You are relying on an optimistic future income that is not stable today.
Refinancing is a tool. Used carefully, it can support your long-term goals. Used without a plan, it can make a problem larger over time.