4 Reasons to refinance in 2025

Feeling like a refresh?

Why Refinancing Is Worth Considering in 2025

After dealing with clickbait headlines, lightning-fast rate fluctuations, and general economic uncertainty, it’s no surprise that homeowners are feeling apprehensive about refinancing their mortgages. But we’re here to caution you: don’t let those feelings of doubt cause you to overlook valuable opportunities. 

Yes, it’s true: we’re no longer seeing the insanely low rates of 2020 and 2021. But, according to this month’s Everest expert (Senior Loan Officer Faye Berkowitz), the historically normal rates we’re seeing in 2025 are still viable for a strong refinance decision. 

“Each potential refinance should be looked at on a case-by-case basis,” explains Faye. “Despite today’s rates, refinancing can still be a smart financial move—especially for people in specific situations.”

With 30-year fixed mortgage rates currently hovering just under 7%, the refinancing conversation looks different than it did a few years ago. But ‘different’ doesn’t mean ‘unworthy’! Let’s explore why refinancing still deserves a second look, even in a higher-rate environment. 

3 Key Facts About Comparing Refinancing Rates

“One of the main things we’re seeing is that homeowners are comparing today’s rates to those from several years ago,” Faye says. They see those 4% and under and they think that either 1) the time for refinancing has passed or 2) the best thing to do would be to wait until the rates go back down. But that’s not necessarily smart.”

It’s important to note that interest rates are not as straightforward as they are often portrayed. Thankfully, you’ve got the Everest team to break things down. Here are 3 things you should know about refinancing rates:

1. Rates are relative, not absolute. While today’s rates may be higher than pandemic lows, they are still fairly moderate in the historical sense. In fact, in the early 2000s, rates in the 6% range were considered favorable. Let’s take a look at some historical data:

• 1970s: Mortgage rates began in the mid-7% range in 1971 and climbed steadily, peaking at 12.90% by the end of 1979.

• 1980s: The early 1980s saw rates soar to unprecedented levels. In October 1981, the average 30-year fixed mortgage rate reached a record high of 18.45%, driven by efforts to combat stagflation.

• 1990s: Mortgage rates started at 9.56% and gradually decreased, ending the decade at a high of 6.74% in a reflection of the economic stabilization and lower inflation of the time.

• 2000s: Rates continued to decline, averaging around 6.18% by 2006. These rates were influenced by global economic factors and Federal Reserve policies of the 2010s.

2. Financial circumstances are always changing. What didn’t make sense for you two years ago might be excellent for you now—especially if your income; credit card and other debt balances; credit scores; or budgets have shifted. We highly recommend yearly financial audits! See what your current reality is and then make a decision.

3. Financial focuses have shifted. With rising costs across the board, it’s important to consider your global debt.  Inflation and affordability have been a real problem, so chances are you are carrying a lot of expensive debt. Refinancing can be a strategic way for you to consolidate these debts or restructure obligations. Again, look at your comprehensive financial picture and see if a mortgage refinance may be a life-saver for you.

“When you’re doing anything with your money, it’s important to look at the full picture,” explains Faye. “People tend to just look at their mortgage—or they only look a few years into the past or future. Then they draw big conclusions about what they should do. Really, they should be looking much further. This is where an experienced loan officer can really come in handy, since they have the experience and knowledge to point you in a smart direction.”

When Refinancing Makes Sense

“I typically recommend that my clients reevaluate their financial situation pretty regularly,” Faye says. “They should take a good look at all their finances at least once per year, or anytime something big has changed. Things like marriage; a new baby; a new job or promotion; higher living expenses; outstanding credit card balances; or any other financial adjustments affect your rationale for a mortgage refinance. When in doubt, it’s always best to consult a professional.”

Not sure if refinancing is a good fit for you this year? Here are 4 reasons to schedule a meeting with your loan officer:

1. You’re currently dealing with high-interest debt (and who isn’t?).

Credit and personal loan debt often carry higher interest rates. Even with mortgage rates as they are right now, rolling that debt into a refinance can result in significant monthly savings and simplified financial management. This strategy is particularly useful for:

• Households that accrued debt during a high inflation period (ex. 2022-2023)

• Borrowers with multiple loans and credit card bills

• Individuals struggling with managing multiple types of debt

2. Your credit has improved.

If you initially qualified for a mortgage with a fair or average credit history, and have since improved your score, you could be eligible for much more favorable terms. Even small improvements in your number can unlock:

• Lower interest rates

• Reduced private mortgage insurance (PMI) payments

• More flexible loan terms with more manageable payments

3. You’re considering a different type of loan.

In a more volatile market, borrowers may find that switching to a different loan product can help them improve their financial security and reduce overall stress. Some examples include:

• Switching from an adjustable-rate mortgage (ARM) to a fixed-rate loan. 

• Changing from an FHA loan (or any other more expensive mortgage program) to a conventional loan.

• Switching from a shorter term amortization to a longer term amortization or an interest-only mortgage.

4. You want to adjust your loan terms or payment structure.

Similar to the previous point, borrowers may decide to adjust their loan terms to better fit their unique situation—or the current state of the market. Here are some examples:

• Moving from a 15 to a 30-year term to reduce monthly interest. 

• Switching from principal-plus-interest payments to interest-only payments.

• Switching to a custom loan term to reduce total payments over the life of loan.

Breaking Down The Breakeven Point

One of the most important things for borrowers to consider before taking out a loan is the closing costs. These charges typically range from 2 to 5% of the loan amount and can cause a significant impact on the borrower’s budget. 

“To determine if refinancing is worth the expense, one of the things that your loan officer will do is calculate what’s called a ‘breakeven point’,” Faye explains. “Basically, this is the number of months it takes for the money a borrower has saved for the loan to outweigh the upfront costs.”

Your loan officer can help you understand this formula and what the results mean. They can also help you run custom scenarios based on your unique situation, to help you determine if refinancing would be a good fit for you at this point in time. 

Refinancing Strategies by Homeowner Type

Now let’s take a quick break from all this technical talk and have a little fun! See if you can find a bit of yourself in one of these profiles; you might just be in line for a beneficial refinance:

• Mr. Movin’ On Up – This homeowner bought a starter home 5-7 years ago. He’s in the mood for an upgrade, but he’s feeling bogged down by higher housing costs. His loan officer recommends refinancing to a longer term to lower their monthly obligations and help him save toward a future purchase. 

• Ms. Credit Comeback – This homeowner has been working hard to overcome her credit issues. Now, her credit profile is stronger than ever and her future is looking bright. Her loan officer says that refinancing could unlock thousands of dollars in long-term savings—and help her eliminate a costly PMI.

• Mr. & Mrs. Reaching Retirement – These homeowners are just about retirement age and they want to lock in a fixed payment before they leave the workforce. In this case, their loan officer recommends a fixed-rate loan, a shorter-term loan, or a $0/year reverse mortgage to create more financial stability in retirement. 

The Pros and Cons of Refinancing

Final Tip: Focus on the Facts

With all those eye-catching headlines out there, it’s easy to get lost in everyone else’s opinion. When it comes to refinancing, the only perspective that matters is yours.

“With all the doom and gloom in the news these days, it’s easy to feel like refinancing is off the table,” says Faye. Actually, though, in many cases, it’s more relevant than ever. As soon as something changes in your life, more opportunities for the future emerge.”

If there’s anything we’ve learned from our years of experience, it’s that the path forward can look different from year to year—but it’s always there. The key is to look at as much information as you can and use that to power your ultimate decision. 

Everest says: We can help you sort out 

the headway from the headlines.

Everest Equity

Passionately serving home buyers 

and homeowners since 2004 

When change is on the horizon, trust our diverse team of

professionals to guide you to the best options for your future.