When is it a good time to refinance? Insights from Chase experts
If you’re thinking about refinancing, one of the biggest concerns is timing. While it’s impossible to predict the market perfectly, Chase experts share the signs it may be a good time to refinance, situations where waiting might make more sense and tips to decide what’s right for you.
“At Chase, we understand that refinancing is a big decision, and we’re here to help you every step of the way. For decades, we’ve worked alongside our customers to find solutions that fit their unique needs. If you’re thinking about refinancing, our team is ready to listen, answer your questions, and guide you through the process so you can feel confident about your choices.”
- Brittany Jones, Home Lending Advisor, Tempe, AZ
Why homeowners refinance
To decide when to refinance, you need to know what you’re looking to achieve through the process. Homeowners refinance for many reasons, from lowering monthly payments to accessing cash for large expenses. But most motivations fall into two main categories.
1. To change the interest rate or loan terms
The most common category is known as a rate-and-term refinance. It replaces your existing mortgage with a new one, usually to take advantage of lower interest rates, shorten or extend the loan term, or switch between fixed and adjustable-rate structures. The goal is typically to improve long-term affordability or financial stability.
2. To access your home’s equity
Some homeowners refinance to tap into the equity they have accumulated in their property. A cash-out refinance is one common way to do this. In this refinance, a larger mortgage replaces your current mortgage, and the difference goes to you in cash.
Depending on your needs and loan type, there are also other ways to access equity through refinancing. Homeowners often use these funds for renovations, debt consolidation, education costs, or other major investments.
While these are the two main categories, you can also consider more specialized refinance options, such as streamline programs for government-backed loans, no-closing-cost refinances and cash-in refinances that help reduce your loan balance. The best choice depends on your goals, equity and overall financial picture. Please note that a refinance with no closing costs does not mean there are no costs to refinance a mortgage.
“When you connect with a Chase expert, you’re not just getting information—you’re getting a partner who’s excited to help you find the refinancing option that truly works for you. We’ll break down your choices in plain language and make sure you feel confident every step of the way. Our goal is to help you achieve your financial dreams, and we’re here to make the process easy and positive!”
- Ontonio Cahill, Home Lending Advisor, Tempe, AZ
When to consider rate-and-term refinancing
If you’re interested in lowering your monthly payment or adjusting the terms of your loan, here are some signs it might be the right time to move forward:
- Interest rates fall: If interest rates are significantly lower than when you locked in your rate, you could lower your monthly payments by refinancing. Alternatively, you might be able to afford shortening your loan term to save on interest over the life of the loan.
- Your credit score improves: Building and improving your credit score can have a significant impact on the loan terms your lender offers. Even if interest rates haven’t changed substantially, a big enough increase in your credit score could potentially make a noticeable difference in your monthly payment.
- Your home’s value increases: If your home’s value increases significantly, this can lower your loan-to-value (LTV) ratio faster than just making your payments on time does. If you have a conventional loan with borrower paid private mortgage insurance (PMI), you may be able to request cancellation once you meet certain equity and payment history requirements; rules vary by loan type and investor.
- You want to shift to a fixed-rate mortgage: If you opted for an adjustable-rate mortgage (ARM) and the introductory interest rate period is ending soon, it might be in your long-term best interest to switch to a fixed-rate loan.
Remember, if you choose a rate-and-term refinance, you will owe closing costs again. You can use our refinance calculator to get an estimate for how much you’ll owe.
“A rate-and-term refinance can be beneficial even without a big drop in rates. Since your payment is based on a lower loan amount, more of your money goes toward principal rather than interest, helping you build equity faster and pay off your home more efficiently.”
- Celine Diaz, Home Lending Advisor, Tempe, AZ
When refinancing to access equity makes sense
If you’re interested in tapping into the equity you’ve built in the property, here are some potential indicators that it might be the right time:
- You’ve built substantial equity: The more equity you have, the more you can borrow against. More equity also improves the LTV ratio, which can help you qualify for better terms from your lender.
- Interest rates remain competitive: If current mortgage rates are close to your existing rate, you can tap your home’s value without significantly increasing your monthly payment or long-term costs. Even if rates are slightly higher, it may still be worthwhile if you need funds for major expenses or opportunities that outweigh the added cost.
- You have a clear, time-sensitive use for the funds: Refinancing to access equity can make sense when the opportunity to use the money for a productive purpose will not wait—a down payment on an investment property, renovations, or high-interest debt payments. Even if market conditions are not ideal, some opportunities are simply too good to pass up.
- Your overall financial profile is stronger: If your income has increased, your credit score has improved, or your debt has decreased since taking out your original mortgage, you may qualify for more favorable terms. A stronger financial profile can make refinancing to access equity more cost-effective and sustainable in the long run.
Keep in mind that there are other ways to leverage your home’s equity besides refinancing. A home equity line of credit (HELOC) is a strong alternative worth considering.
“Chase offers unmatched convenience and personalized service, whether you’re accessing your home’s equity through a HELOC, refinance, or cash-out. Our clients benefit from dedicated support both over the phone and in person, ensuring a smooth and confident experience from end to end.”
- Casey Ward, Home Lending Advisor, Tempe, AZ
Situations when it might not be a good time to refinance
Regardless of why you want to refinance, here are some warning signs that could signal now isn’t the right time to pursue a new loan.
You plan to move or sell your home soon
Refinancing involves closing costs that can take time to recover through monthly savings. Before moving forward, it is essential to calculate your break-even point, which is the number of months it will take for the money you save each month to offset the initial cost of the new loan.
Refinancing may not be ideal for your financial situation and goals. For instance, you may be planning to move to another city or sell your home before you hit the break-even point. In that case, the upfront costs could outweigh the benefits of a lower monthly payment, leaving you with a smaller overall return.
Interest rates have increased
If current mortgage rates are higher than your current rate, refinancing could increase both your monthly payment and the total amount of interest you pay over the life of the loan. You should avoid this situation if at all possible.
Your financial profile has weakened
Your credit score, income and debt levels all play a major role in determining the loan terms a lender can offer. If your situation has declined in any of these areas, you may no longer qualify for the same competitive rates or conditions you received with your original mortgage. A weaker profile can lead to higher interest costs, less favorable terms or even difficulty qualifying for the refinance altogether.
Your home’s value has decreased
When property values drop, your equity position shrinks and your loan-to-value ratio increases. This can limit your refinancing options, raise your interest rate, or even require you to pay private mortgage insurance again. If your home’s value falls below what you owe, you could end up underwater, making it difficult or impossible to refinance until the market improves. In most cases, it is best to wait until your home regains value before pursuing a new loan.
“With home values consistently remaining high, now’s a great time to take advantage of the equity your home can provide by leveraging your home’s equity through a cash-out refinance or HELOC. You can access funds to invest in these improvements, potentially increasing both your enjoyment and the future resale value of your property.”
- Mariana Islas, Home Lending Advisor, Tempe, AZ
Tips for deciding if you should refinance now
Here are some questions to ask yourself that can help you decide if it’s a good time to refinance.
- Do you plan to move or sell the home soon?
- Will your interest rate be higher than your current interest rate?
- Would it take longer than you’re comfortable with to break even on the closing costs?
- Has your home’s value decreased since you bought it?
- Has your credit score dropped or your debt increased?
If the answer to any of those questions is yes, it might not be the right time to refinance. If you do decide to hold off, make sure to revisit these questions periodically so that you’re ready when circumstances improve. However, if you’re still interested in exploring your options now, you can always reach out to a Chase Home Lending Advisor (HLA) to talk through your options.
“When considering refinancing, we focus on what matters most to you. By providing a side-by-side comparison of your current situation and proposed options, we make it easier for you to see the benefits and make an informed decision.”
- Hector Gastelum, Home Lending Advisor, Tempe, AZ
Next steps to start the refinance process
If you think refinancing could be right for you, start by reviewing your goals. Perhaps you want to lower your rate or change your loan term. Or maybe you need access to your home’s equity. Knowing what you want to achieve will help you and your lender find the right approach.
Next, take a look at your current mortgage and your broader financial picture, including your income, expenses and credit. These factors will influence what kind of refinance options may fit best.
When you’re ready, consider connecting with a Chase HLA who can review your situation, explain your options, and guide you through the application process from start to finish.
In summary
Deciding when to refinance involves more than just watching interest rates. The right timing depends on your goals, finances and the length of time you plan to stay in your home.
Chase can help you review your options, compare potential savings and find the refinance strategy that fits your needs. With expert guidance, you can make a confident decision about whether now is the right time to move forward.
“Chase is committed to helping you make informed refinancing decisions that fit your unique needs and goals. Our experienced team provides clear guidance and support throughout the process, so you can feel confident every step of the way.”
