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Is Now the Time to Refinance Your Mortgage?

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Is it the right time to refinance?
Bestmoney Staff
Bestmoney Staff
Feb. 03, 20212 min read
Over the years your budget and lifestyle might have changed, meaning your mortgage may no longer be a perfect fit. If, for example, you have an adjustable fixed-rate mortgage, there is a set period of time in which you can make fixed payments at a low rate. Once that period is over, you might be paying more than you can afford. This could be the perfect time to refinance your mortgage.

Mortgage Loan Terms

A fixed rate is commonly set at 15 or 30 years. The interest rate that you secure in the beginning will remain the same throughout the duration of the loan term. This means that you will have the same payments every month, and you can budget and plan more easily. By comparing rates from lenders, you can choose the lowest rate and save even more money on your loan.

Job Changes

The job and career that you had when you first purchased the home may be vastly different than the one you have now. If you’re making more money, you may have the ability to put more toward your mortgage and pay off the home in a shorter amount of time. For example, you may currently have 30-year fixed rate mortgage . By refinancing into a 15-year fixed rate mortgage, you can get lower interest rates and pay off your home in half the time. Evaluate your job stability, current salary, and any anticipated salary increases to decide if refinancing works for you.

Compare Our Top Lenders

Lender Minimum Credit Score
AmeriSave 620
Quicken Loans 620
Better.com 620

Family Changes

Major family changes can have a dramatic impact on your financial situation. If you’re in the process of getting divorced or your partner has passed away, your once-affordable mortgage payments may be difficult to make each month. By refinancing and obtaining a new agreement, you have the ability to lower your monthly payments and make them fit within your budget. Transitioning to a single budget can be made a lot easier by lessening the burden of your monthly mortgage.

Today's Refinance Rates


Average Rate
Today
Average Rate
3 Months Ago
Refinance
30-year fixed
3.353% 2.967%
Refinance
15-year fixed
2.684% 2.686%
Refinance
5/1-year ARM
2.974% 2.967%
Purchase
30-year fixed
3.122% 2.735%
Purchase
15-year fixed
2.523% 2.345%
Purchase
5/1-year ARM
2.924% 2.909%

Money Windfall

If you’ve recently come into a large sum of money, you may want to use that cash to help pay off a home mortgage. By refinancing, you can set up a term that allows you to get the home paid off in a short period. Along with the 15-year fixed rate loan, you can choose an even shorter term known as a balloon payment. A balloon payment features several years of fixed payments until a final end date is set. The end date includes a large payment amount for the remaining principal owed on the house. With this refinancing option, your home can be fully paid off in five to seven years.

Equity Increase

Your equity is the market value of your home minus the amount you still owe, and it naturally increases with each payment that you make. The equity can also increase with the appraised value of your home. There are several factors that can impact the value of your home. Other home sales in the area, home improvements, and changes in the housing market are just a few of the factors that can increase your equity. If your equity has recently increased, it may be a good time to apply for a cash-out refinance loan. This type of loan will pay you extra based on the equity you have available.

A home may have been purchased at $300,000. If you put $50,000 down and have paid another $50,000 toward the mortgage, the remaining balance of the home would be at $100,000. Following an appraisal, the home may now be valued at $400,000. This allows you to get a cash-out refinancing loan of up to $200,000 -- $100,000 from payments you made and another $100,000 for the increased equity value. You do not need to obtain the full $200,000 as a cash-out option; you can select any amount that you need for your current situation. The loaned money will be added to your overall principal and applied to your monthly mortgage payments.

Choosing the right time to refinance your home could end up saving you thousands of dollars.

Check out various refinancing lenders and be fully prepared when the timing is right for your home and situation.

Our Recommended Lenders

AmeriSave

AmeriSave Mortgage Corporation is a full-service mortgage lender operating in 49 states and DC. Established in Atlanta in 2002, it has funded 220,000+ homes for a total value of more than $55 billion. AmeriSave is known for offering streamlined online applications with the option of contacting customer support any time you need assistance.

  • Apply and submit forms directly online
  • No SSN needed to get pre-approved rates
  • Recommended for refinancing

AmeriSave Mortgage AmeriSave Mortgage View Rates

Quicken Loans

Quicken Loans is one of the most reputable mortgage lenders. It offers a large range of mortgage options including refinance loans, FHA, USDA, VA loans, jumbo loans and more.

  • Fast application process
  • A bevy of educational resources
  • Award winning customer service

Quicken Loans Quicken Loans View Rates

Better.com

You can get pre-approved for a mortgage in minutes with Better mortgage. There are no origination or lender fees, no commission, and no prepayment penalties. Better allows you to lock in your rate and connects you with a single loan officer once you've finished the pre-approval process. 

  • No origination or lender fees
  • Various fixed and variable rate options
  • Fast approval process

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Top 5 Mortgage Loans

Quicken Loans

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Bestmoney Staff
Written byBestmoney Staff

Our editorial staff consists of writers who are knowledgeable about financial services. We specialize in simplifying the process of choosing the right provider for your needs.

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