I can save $172 a month if I refinance my mortgage, but is it actually worth it in the long run? What homeowners need to know

But is it actually a good deal? Let’s just say, the monthly payment doesn't tell the whole story. Here's the state of home financing in the U.S., and what mortgage-holders need to know before refinancing.

Homeowners are eager to refinance

Many who bought homes recently have been watching mortgage rates closely. A survey conducted by U.S. News between in September found nearly 74% of Americans who bought a home in the previous year plan on refinancing in the future, while 19% said they do not and 7% already had (1).

But expectations don’t always line up with reality. Forty percent of recent buyers said they want rates to fall below 5.5% before refinancing, while 30% want to wait for rates under 5%, and 15% want rates dropped below 4.5% — levels that economists don’t expect to see anytime soon.

Mortgage forecasts collected by U.S. News suggest 30-year fixed rates will hover between 6% and 6.5% through 2026, with only a small chance they'll dip below 6% toward the end of the year into 2027 (2). In other words, homeowners hoping for low rates may be waiting a long time.

How to tell whether it's worth it to refinance

Refinancing your mortgage can lower your monthly payment, but beware of deals that add interest and balloon the total cost of a home. Here are some things to consider:

Closing costs and fees: Closing costs for a refinance can sometimes run into the tens of thousands of dollars, especially on large loan balances. If it takes several years for your monthly savings to outweigh those costs, and you expect to sell or refinance again before then, you could end up losing money overall. That’s why it’s important to calculate the “break-even” point.

Timing: Refinancing now could mean missing out on a better opportunity later if rates dip. And refinancing too often can lead to repeated closing costs that erase potential gains. This can be hard to get right, so you may want to pay attention to forecasts from mortgage experts.

Loan term: When you refinance and reset your mortgage to a new 30-year term, you’re stretching your payments out over a longer period, meaning you’ll make more payments, including paying interest for more years. That can significantly increase the total amount paid over the life of the loan, even if the interest rate is lower. But if the new rate is low enough, you might actually save money.

Before saying yes to a new loan, experts recommend running the numbers carefully. A refinance calculator can show how long it will take to break even and whether the long-term savings truly outweigh the costs. In Nati’s case, it seems switching to the new rate and resetting the loan term to 30 years would add over $10,000 in interest. Plus, she also has to pay the necessary fees. Of course, what she does with the extra $172 each month — she may decide, after all, to invest and grow it — can change the calculation.

For homeowners focused on budget relief, it’s also worth exploring alternatives, such as shopping for lower-cost homeowners insurance, reducing household costs or removing private mortgage insurance, before committing to a full refinance.

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U.S. News (1, 2)