With the average 30-year refinance rate at 6.71% in May 2026, borrowers who locked in at 7.25%+ in 2023-24 have a meaningful opportunity to save. Here is how to decide if refinancing is right for you.
The break-even formula
Break-even months = Closing costs ÷ Monthly savings
If closing costs are $4,500 and you save $200/month, you break even in 22.5 months. If you plan to stay longer, refinancing makes financial sense.
Who should refinance in 2026?
| Current rate | Verdict | Est. monthly saving ($350K) |
|---|---|---|
| 7.25%+ | Strong case | $240-$310/mo |
| 7.00% | Good — if staying 3+ yrs | $175-$220/mo |
| 6.75% | Marginal — run the numbers | $80-$110/mo |
| 6.50% or below | Unlikely to make sense | $0-$50/mo |
How to refinance: 5 steps
1. Check your equity and credit score. Need at least 20% equity. Score of 740+ gets the best rates.
2. Run the break-even calculation. Closing costs run $3,000-$7,000. Make sure you will stay long enough to recoup them.
3. Get quotes from at least 3 lenders. Multiple applications within 14 days count as one credit inquiry. Compare APR not just rate.
4. Lock your rate. Locks last 30-60 days. Watch the 10-year Treasury yield — when it drops, mortgage rates follow.
5. Complete appraisal and close. Expect 30-45 days from application to close. Avoid large purchases or job changes during this period.
Use our Mortgage Calculator to compare your current payment against a refinanced rate and calculate your exact break-even point.