Jean Chatzky
Do one thing: If you decide that refinancing is right for you, don’t accept the first offer you receive. Research shows that those who shop around and get several quotes tend to get a lower interest rate than those who don’t seek out other offers.
If you own a home, the end of the year could be a smart time to evaluate your mortgage or loan refinancing options, especially if there’s a potential to save money over the life of your loan. The good news here is that several million Americans are already in the position to do just that.
Millions of Americans Could Save Money With a Refi
New research from ICE Mortgage Technology shows that more than 4 million U.S. adults could be “in the money” if they refinanced their home loans, according to a November report from Morningstar.
Deeper Data Dive
Digging into the data, the number of people who are considered highly qualified to refinance a home loan – those with the following:
- Credit score of 720 or higher
- Have 20% or greater equity in their home
- Could achieve a savings of 75 basis points or more (which is .75%)
This group increased to 1.7 million in October 2025. And when a wider pool of borrowers was included, some 4.1 million people with mortgages could save at least 75 basis points (again, three-quarters of a percent) by refinancing at current rates, according to ICE Mortgage Technology, a mortgage platform that is part of Intercontinental Exchange, Inc.
What does that mean for you? It really depends on where you are in your homeownership journey.
Is a Refi Right for You?
When you consider whether you should refinance your home loan, make sure you ask yourself these questions – or cover them with your lender – before moving forward:
- What is my mortgage percentage rate now?
- Will it be lower when I refinance? By how much?
- How much will closing costs add to the final price of the new loan?
- Do I plan to stay in my home or apartment for at least three years?
- Are there any prepayment penalties attached to my current mortgage?
Should You Refinance Before the New Year?
Alvin Carlos, CFA, CFP, a financial planner and managing partner at District Capital Management in Washington, D.C., says he typically recommends refinancing when rates are about 0.75% to 1% lower than your current rate. “The key is whether the monthly savings are enough to offset the upfront costs (typically 2-3%) of the loan amount,” he explains.
Work Out The Math
You’ll need to crunch the numbers to figure out how much in savings you’re truly looking at. For example, Carlos says:
- If you have a $400,000 mortgage and refinancing costs about $8,000, you would want to see enough monthly savings to break even within three to five years.
- If dropping your rate by 0.75% saves you $250 a month, that’s a 32-month break-even point.
- If you are planning to remain in your home longer than that period of time, refinancing is worth considering.
- If you think you might move, the deal is not worth doing.
- If you have a 7% mortgage rate and the rate drops to 6.25% by the end of the year, and you plan to stay put for another 5 years, and you can recoup your closing fees in three years or less, then it makes financial sense to refinance.
Why Do It? Potential to Improve Cash Flow
Samantha Mockford, CFP, AFC, a wealth advisor at Citrine Capital in San Francisco, says one clear reason to refinance a mortgage is to improve your current cash flow.
- If the price of your home has appreciated significantly
- You want to put the equity to a different use, that’s another argument in its favor (though be careful of pulling out so much equity that if your home falls in value, you might find yourself underwater).
- And there’s the consideration of paying less in interest to your lender overall.
When It’s Not the Right Decision
Like so many things, deciding if a refi works best for you depends on a number of factors.
It may not be in your best interest if, Mockford says:
- Interest rates are not much lower than when you first started your mortgage.
- Also, if you are required to pay points, you need to make sure you plan on staying and continuing payments long enough that your monthly savings total up to more than the points you paid.
- Other reasons a refi may not be right for you right now are if your credit score has dropped since you took out the home loan.
- If you plan to move in the next three to five years.
Online Calculators Can Help
There are simple online refinance calculators, Mockford says, to help you determine whether a refi would work in your favor. Plus, those who use SavvyMoney can also see what refinancing a home loan would look like by utilizing their online banking dashboard.
Consult With Lenders. As you weigh your options, don’t forget that using online tools may not give you the whole picture. Your best bet for what a refinance may look like for you is to consult with several lenders, as mentioned above, to see who can provide the best money-saving deal on a new mortgage.
With reporting by Casandra Andrews
