Mortgage rates have dropped. Is now the time to refinance and save?

Mortgage rates have fallen to a three-year low, prompting some homeowners to ask whether now is the right moment to refinance.

The average 30-year mortgage rate moved to 6.15% last week, up marginally from 6.10% the week prior, according to Bankrate's national survey of lenders. While mortgage rates ticked back up due to inflation fears linked to the Iran war, that's considerably below where they started in early 2025, when they briefly climbed above 7%. Experts say they expect rates to level off rather than slide much below 6%.

Refinancing a mortgage can be a smart move for your money, but timing and your personal situation matter, too.

While many homeowners look to refinance when interest rates drop, experts say rates alone shouldn't drive the decision. 

When refinancing makes sense

A good rule of thumb for refinancing is seeing at least a one‑percentage‑point difference between your current rate and a new one, according to Stephen Kates, a financial analyst with Bankrate.

 "I typically tell people that you need to have at least a percent or more in terms of the gap between what you have and what you could have," Kates said.

Homeowners with a mortgage rate around 7% — or higher — may see meaningful savings by refinancing. Even a small decrease in your rate can save thousands of dollars a year, depending on the size of your loan.

The cost of refinancing

Lowering your rate isn't the only math involved. Refinancing itself can be expensive and time‑consuming.

"Your new mortgage if you're refinancing, even if it's with the same bank, is essentially an all-new loan that pays off the old one," Kates said.

Closing costs typically range from 2% to 6% of the new loan amount, according to Bankrate. That means refinancing a $300,000 mortgage could cost anywhere from $6,000 to $18,000.

Homeowners should weigh these upfront costs against how much they'll save monthly — and how long they plan to stay in the home.

"The lower you can get, the easier it's going to be to see those savings in real time," Kates said.

Shop around for the best rate

Kates notes that homeowners don't have to refinance with their current lender. Shopping around can help you secure a better deal, and your credit score can play a major role. Higher scores tend to qualify for lower rates.

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