Should you refinance with today’s historically low rates?

Many experts will tell you shouldn’t refinance unless you’re saving 1% lower in rate. With today’s interest rates being on average below 3%  here’s how you should determine whether refinancing for you and your family makes sense or not…

Stop paying attention to all of the internet articles and all the so-called financial experts out there. It’s your mortgage, your house, your money, your bills, and ultimately your budget. Only you can decide. So please take what you hear on the internet with a grain of salt.

On average 30-year mortgage is right now with excellent credit conventional loans are under 3% for a single-family home. As an example, let’s say have a 3.75% 30 or fixed-rate mortgage and you can go to 2.75% on a new 30-year fixed-rate mortgage. You’re going down 1% in rate which translates to approximately $300 to $400 a month on most loan amounts. Taking the consideration closing costs of approximately $3k which is average closing costs on most loan sizes, and you have a speedy recapture. Generally, it doesn’t take much to realize such an opportunity would unequivocally make sense.

What about starting the clock over? Well, whenever you refinance your house and do a new 30-year mortgage you always start the clock over no matter what the experts tell you. There are two ways to offset this, the first way is to make the same payment on the new loan you were previously making on the loan you just paid off. Doing so would enable you to subsequently prevent starting the clock over while paying less and interest over the total term of the loan. The other is to have the lender you’re working with specifically amortize the loan based on the loan you’re refinancing.

et’s be clear getting a mortgage is really not the most fun thing in the world to do it is paperwork intensive, you have to be accountable to time frames. The savings ought to be in alignment with the paperwork. Simply put, it should be justified.

While there are some companies out there that have robust online lending platforms, at the end of the day don’t be fooled it’s still the same paperwork every mortgage company in America needs.

If you’re getting a refinance offer where you’re not paying any closing costs, make sure it is specifically no cost. Don’t let a lender doop you into a  situation where you’re just rolling the closing costs into the loan, inflating the loan balance and, call that a no-cost loan. A good rule of thumb is you need to save at least $200 a month when refinancing, go into a shorter-term loan, or save at least 1% in interest if you’re going to paying fees. If you’re not paying fees those numbers can very easily go down and then it would be up to you to determine whether or not the opportunity makes sense.

Looking to refinance? Get a no cost quote now!

RELATED MORTGAGE ADVICE FROM SCOTT SHELDON

When buying a home, it’s natural to want the lowest mortgage rate possible. But sometimes, chasing a slightly better rate from another lender—especially after your offer has already been accepted—can backfire in a big way. Let’s walk through a real-world scenario. You’ve got an offer accepted on a house. You’re working with a lender who has you approved, documents in underwriting, and a 21-day close of escrow in place. Everything is moving forward. Then you hear from another lender offering a rate that’s 0.25% lower, with slightly better closing costs. It’s tempting. But before you make a jump, here’s what you need to consider. Switching Lenders Comes with Time Costs When you pivot to a new lender mid-contract, they’ll need to: Re-underwrite your entire loan, Order a new appraisal, Disclose and sign new loan documents, Submit the file for final loan approval, Schedule and fund closing—all over again. This doesn’t happen overnight. Even in ideal circumstances, the new lender is likely going to need at least 25–30 days to close. If you’re in a fast-moving or competitive market, this is a real problem. Most sellers won’t grant a contract extension just because you’re switching lenders. So, what happens next? A Contract Extension Can Jeopardize Your Deal Asking for a contract extension means the seller must agree to delay closing. But that delay introduces risk—especially if the seller has backup offers or simply wants certainty. They may not grant the extension. Or worse, they could cancel the deal outright and take another buyer’s offer. Even if the seller agrees to extend, your earnest money and negotiation power could take a hit. And for what? A slightly lower rate that might save you $50 to $75 a month? Mortgage Rates Aren’t as Far Apart as You Think Here’s the truth: all mortgage lenders get their money from the same place—the bond market. The pricing differences between lenders usually range from 0.125% to 0.25% in rate on any given day. If one lender seems to be offering dramatically better pricing, the first thing you should ask is: How? Head over to FreddieMac.com and check the average 30-year fixed rate posted weekly. This is one of the most reliable benchmarks for where rates truly stand in the market. If a lender is quoting you a rate that’s well below that average, ask for the details: Are they charging extra points? Is this a teaser rate with a prepayment penalty? Is it based on a different loan product or risky structure? Often, what sounds “too good to be true”… is. Consider the Bigger Picture Think long-term. If you’re financing $600,000, a 0.25% lower rate may reduce your payment by roughly $75/month. But what if you lose the house and have to start over? That monthly savings doesn’t mean much if you’re outbid on your dream home or lose your deposit. Also, remember: you’re not going to keep this rate forever. Today’s homebuyers typically refinance when rates drop by about 0.75% or more. So if rates fall within the next year or two, you’ll likely be refinancing anyway. Instead of paying extra points now or risking the entire deal for a minor monthly savings, it may be better to accept a slightly higher rate—knowing you’ll refinance when the time is right. The Real Risk Isn’t the Rate—It’s the Delay When shopping for a home loan, don’t just ask, “What’s your rate?” Ask: Can you close on time? Is this rate sustainable or based on hidden costs? Will switching lenders delay or jeopardize my contract? A home purchase contract is a binding agreement between you and the seller to perform within a set timeframe. If you can’t meet those dates because you're chasing a slightly better rate elsewhere, you may want to reconsider if now is the right time to buy. Final Thoughts Yes, interest rates matter. But execution matters more. Before making a switch mid-transaction, talk to your lender. Have an honest conversation about pricing, timelines, and strategy. You might find that staying the course, securing the house, and planning to refinance later offers a better path to financial security. Want to Know Your Options? Let’s compare rates and strategies the smart way—without risking your dream home. 👉 Click here to get a custom rate quote today.

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