Your mortgage is likely your biggest monthly expense. In 2025, as the economy shifts and interest rates change, thousands of homeowners are asking: “Is now the right time to refinance my mortgage?” If done correctly, a refinance can lower your monthly payment, shorten your loan term, or even give you cash for home improvements.
The “1% Rule” of Refinancing
A common rule of thumb is that if you can lower your interest rate by at least 1%, it is usually worth the effort. For example, if your current rate is 7.5% and you can get a new loan at 6.5%, you could save hundreds of dollars every month.
- Lower Monthly Payments: Frees up cash for other bills.
- Shorten the Term: Move from a 30-year to a 15-year loan to pay off your house faster.
- Remove PMI: If your home value has gone up, you might be able to stop paying Private Mortgage Insurance.
Current National Refinance Averages (Late 2025)
Rates change daily, but here is where the market stands as of December 2025:
| Loan Type | Average Interest Rate | Average APR |
| 30-Year Fixed Refi | 6.66% | 6.72% |
| 15-Year Fixed Refi | 5.93% | 5.99% |
| VA Refi (Veterans) | 7.62% | 7.69% |
| Jumbo Refi ($1M+) | 6.69% | 6.72% |
Understanding the “Break-Even” Point
Refinancing isn’t free. You have to pay “Closing Costs,” which usually range from 2% to 5% of the loan amount. To see if a refi is smart, you must find your “Break-Even Point.”
- Example: If your closing costs are $5,000 and the new loan saves you $200 a month, it will take you 25 months to break even. If you plan to stay in the house for 10 years, it’s a great deal. If you plan to move next year, it’s a mistake.
Tips for Getting the Best Rate
- Check Your Credit: A score of 740+ gets you the “teaser” rates you see in ads.
- Compare at Least 3 Lenders: Don’t just go to your current bank. Online lenders often have lower overhead and better rates.
- Ask About “Points”: You can pay more upfront (buying points) to lower your rate for the entire life of the loan.
Next Step: Your dream rate might be just a click away. Compare today’s best mortgage refinance offers and calculate your potential savings.