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There are plenty of good reasons to refinance — and falling mortgage rates tend to get the most attention. But a lower rate alone doesn’t guarantee a better deal.
A mortgage refinance only makes sense if it improves your financial picture, whether that means cutting your monthly payment, getting rid of mortgage insurance or reaching another goal.
Here’s how to tell when refinancing is worth it, and when you’re better off sticking with your current loan.
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Is now a good time to refinance?
Considering last week’s average mortgage rates, you might want to think about a refi if your current mortgage rate is around 6.64% or higher.
Here’s how we got to that number:
- 👍 NerdWallet’s refinance rule of thumb: You start to save money by refinancing when today’s mortgage rates drop 0.5 to 0.75 of a percentage point from your current loan. (A lower mortgage rate means a lower monthly payment.)
- 🤔 Why we picked it: Other sources suggest waiting for a drop of one or two percentage points. But with recent years’ mortgage rates peaking above 7%, plus strong national trends of increasing home values — these days, you can reap the benefits with a smaller drop.
- ☝️What to do next: Compare today’s rates with your current one and estimate your savings. Plug your numbers into NerdWallet’s refinance calculator to see your break-even point and decide if the math works in your favor.
Some lenders and loan types require you to wait six to 12 months after your last home loan before refinancing. Otherwise, you can refinance whenever (and as often) as you want — just keep in mind that upfront costs and fees can eat into your savings.
Here’s what mortgage rates have been up to the past week:
Average weekly mortgage rates
| Mortgage type | APR |
|---|---|
| 30-year fixed mortgage | 6.14% |
| 15-year fixed mortgage | 5.81% |
| 5-year adjustable | 6.43% |
Averages are for the week ending March 18, 2026, according to rates provided to NerdWallet by Zillow.
We’re pretty nerdy about refinance mortgage rates. If you’re keeping an eye on rates, these pages can help you track what’s happening right now:
Questions to ask before you refinance
No matter your reason for refinancing, you're going to want to figure out a few numbers before you apply.
- What’s your current interest rate? Check your most recent mortgage statement to confirm your exact rate. Even a fraction of a percentage point can make a difference over time, so don’t rely on your recollection of “around 6%.”
- How much will it cost? Are you refinancing just your remaining balance, or taking out more with a cash-out refi? Either way, know your estimated loan amount. Refinance closing costs typically run 2% to 6% of the new loan, so that number helps you ballpark how much it costs to refinance.
- How long do you plan to stay in your house? If you’re refinancing to save money, calculate your break-even point — the time it takes for your monthly savings to outweigh your closing costs.
For example: If you spend $3,600 on closing costs and save $100 a month, it will take 36 months to break even. You’d need to stay in the home at least three years to come out ahead.
When is it worth it to refinance a mortgage?
Getting a lower mortgage rate is only one reason to refinance. Here are some common situations when you might consider refinancing.
You want to lower your monthly payment
If mortgage rates have dropped, refinancing to a lower rate can shrink your monthly payment. With a rate-and-term refinance, you can often keep the same payoff timeline — just with a lower interest rate.
You want to pay off your loan sooner
You can refinance your remaining balance into a shorter loan — like switching from a 30-year to a 15-year mortgage — to save on interest over time. The tradeoff is a higher monthly payment.
🤓 Nerdy Tip
If you’d like to pay off your mortgage faster but don’t want to refinance, consider making extra payments on your current loan. This is a smart move if today’s mortgage rates are higher than yours. You want to use home equity to pay for a major expense
With a cash-out refinance, you borrow more than you owe. Then, you receive the difference in a lump sum cash payment. But there are risks to this approach — you’re putting your home on the line if you can’t keep up with payments.
A cash-out refinance can make sense if you’re using the money for an expense that improves your financial situation, like home improvements (which also add value to your house). It’s not usually a wise choice for expenses without a financial upside, like a spendy vacation.
You want to consolidate high-interest debt
You can use refinancing — either by taking cash out or by lowering your rate with a rate-and-term refi — to free up money to pay off high-interest debt. It may simplify your finances or reduce what you pay in interest overall. But use caution: Since you’re tying that debt to your home, you could risk foreclosure if you fall behind on payments.
You want to remove FHA mortgage insurance
FHA loans are backed by the Federal Housing Administration and require monthly mortgage insurance payments. If you’ve built at least 20% equity, refinancing from an FHA loan to a conventional loan could eliminate FHA mortgage insurance premiums.
You want more predictable payments
If you currently have an adjustable-rate mortgage, you can refinance to a fixed-rate loan to offer more stability.
You want to add or remove a borrower
Exceptions exist, but you usually need to refinance to make changes to the named borrowers on your mortgage.
- Adding a borrower: This might make sense if you bought your home solo but are now living there with a partner or spouse. If you’re refinancing to get a lower rate anyway, your combined incomes and assets might result in a lower rate offer than you would receive on your own. But if rates have risen, refinancing just to add another name might not make financial sense.
- Removing a borrower: After a divorce, the partner staying in the home would need to refinance to remove their ex’s name from the mortgage. The lender will review the remaining borrower’s income, credit and debts to make sure they qualify on their own. The interest rate or monthly payment could change based on those new terms.
» MORE: How to split a home in a divorce
When not to refinance a mortgage
Refinancing won’t magically save everyone money. In some cases, you might end up paying more. If any of these situations apply, you may be better off waiting.
You’d be getting a higher interest rate
This one’s a little obvious: If mortgage rates this week are higher than the rate you have, refinancing probably won’t save you money.
But your personal finances affect your mortgage rate, too. Since you bought your home, have you had credit challenges or taken on a lot more debt? You can still refinance with bad credit, but lenders see you as a higher risk — so they could charge you a higher mortgage rate than they’d offer someone with an excellent credit score.
You’re having trouble paying your mortgage
True, refinancing to a longer term (like restarting a 30-year mortgage) is one way to lower your monthly payment. But you’ll pay more interest over time and stay in debt longer, which can set you back over the long term.
If money’s tight, weigh the tradeoffs before going this route. If you’re in a tough spot, ask your lender about loan modification or forbearance.
You don’t plan to stay in the house much longer
If you plan to sell your house soon, you might not have enough time to break even on closing costs — so refinancing may not be worth it.
For example: If refinancing costs $4,000 and saves you $150 per month, it would take about 27 months to break even. If you expect to sell in the next two years, you’d likely lose money on the refinance — plus, you still have to pay closing costs for sellers, which can be 6% to 10% of the sale price.
You need to apply for other new credit
A mortgage application is a hard inquiry, which can temporarily lower your credit score. This could affect upcoming loan applications, like a car loan. Applying for multiple loans in a short period of time can also negatively impact your credit.
Your home has decreased in value
Home values can fall for various reasons. Some are within your control, while others aren’t. The market price of your house could decline because:
- Your local market is cooling off after years of surging prices and high demand.
- Something nearby changed — like a new busy highway, a troublesome neighbor or an environmental issue in the area.
- Your home needs major repairs that haven’t been addressed yet.
Whatever the reason: If your home appraisal comes back lower than you expect, refinancing could be tougher or more expensive.
Should I refinance my mortgage?
You should refinance your mortgage if doing so lowers your total costs or helps you reach a specific financial goal — such as reducing your monthly payment, eliminating mortgage insurance or tapping home equity responsibly.
It usually makes sense when today’s rates are at least 0.5 to 0.75 percentage points lower than your current rate and you plan to stay in the home long enough to break even on closing costs.
If refinancing would increase your interest rate, extend your loan significantly or cost more than it saves, it may be better to wait.
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