If you bought your home when rates were near 7.5%, the people refinancing all around you are not panicking. They are doing arithmetic, and you should too. Refinance applications jumped 20% over the past year as 30-year mortgage rates settled into the mid-6s. The only question that matters is whether the math works for your loan, and there is one number that tells you.
Here is what is happening. The Mortgage Bankers Association reported refinance applications up 15% in a single week in early June, and up 20% from the same week a year ago. Refinances climbed to 40.2% of all mortgage applications, up from 38.0% the week before. The MBA's average 30-year rate sat at 6.60% for conforming loans, with FHA loans at 6.27% and 15-year loans at 5.99%. Rates have bounced around week to week, but they are low enough that anyone who locked in at the top of the cycle is suddenly back in the money.
Refinance applications are up 20% from a year ago, and now make up 40.2% of all mortgage applications (Mortgage Bankers Association).
A refinance replaces your current mortgage with a new one at today's rate. It is not free: you pay closing costs again, usually a few thousand dollars rolled into the loan or paid up front. So the question is never just "is my new rate lower." It is "how long until the monthly savings pay back the cost." That is your break-even, and it is the whole decision.
Run it. Say you owe $300,000 at 7.25% and refinance to 6.60%. Your payment drops from about $2,047 a month to about $1,916, a saving of roughly $131. If the refi costs $4,500, divide that by $131 and you break even in about 35 months, just under three years. Stay in the house past that and every month after is pure savings. Sell or move before it, and you lost money doing the deal. The bigger your rate drop, the faster the break-even, which is why someone who bought at 7.75% has a much stronger case than someone at 6.9%.
So here is the move this week. Pull your current rate and balance off your latest statement. Get quotes from two or three lenders on the same day, because rates and fees both move, and compare the all-in closing cost, not just the headline rate. Compare options on our best mortgage lenders page, then run your real numbers through the mortgage calculator to find your break-even. If you will clearly be in the home past that point, lock it. If you are not sure you will stay, do not let a surge headline talk you into a deal that only pays off for someone who stays put.
Ranking
Our top-rated refinance lenders
Top lenders for lowering your rate or tapping equity.
| Rank | Company | Best for | Key stat | Score | Apply |
|---|---|---|---|---|---|
| 1 | Rocket MortgageRocket Mortgage | Best overall lender | ONE+ 1% down option | 9.3/10 | |
| 2 | PennyMacPennyMac Mortgage | Best FHA lender | Largest FHA lender | 8.7/10 | |
| 3 | BetterBetter Mortgage | Best online experience | Fully online, no lender fees | 8.6/10 | |
| 4 | CrossCountry MortgageCrossCountry Mortgage | Best for refinancing | Low credit-score options, fast close | 8.6/10 | |
| 5 | U.S. BankU.S. Bank Mortgage | Best for bank customers | Relationship discounts | 8.4/10 |
One thing the rush will not tell you: refinancing resets your loan clock. Roll a 7-year-old mortgage into a fresh 30-year and you can lower the payment while paying more total interest. If the goal is to get out of debt faster, ask about a shorter term or keep making your old payment on the new lower rate.
How Candid Yak makes money. Some of the products we write about pay us if you apply or sign up through our links. That never changes our verdict, our rankings, or the numbers in this article. We call a bad deal a bad deal whether it pays us or not. Some brands shown in our comparison tools are placeholder examples while we finalize partner agreements, and we label them as such.