Your Real Estate Expert for Berkeley and Beyond
“Marilyn is exceptional. Her knowledge base, enthusiasm for her job, professional ethics, organization, sensitivity to our aesthetic requirements, loyalty and gentle perseverance set her apart.”
-- Bill and Carol Seidel
Marilyn Garcia, PhD
Broker Associate, Realtor®
DRE# 02014153
District Homes
1758 Solano Ave.
Berkeley, CA 94707
Direct:
(510) 390-5406
When does it make sense to refinance your mortgage?
With forecasters saying that interest rates may trend downward in 2026 and 2027, you might be wondering if it’s time to consider refinancing your home loan. So when does it actually make sense to refinance?
If you have a home loan with an interest rate around 3 percent, you will likely want to hold on to it unless you are planning to move, going through a divorce, or facing another life event that requires refinancing. Short of a major economic disruption, it is unlikely that rates will return to that level anytime soon. But for those who got their loans in the last few years, refinancing may offer some real savings.
It is important to remember that refinancing usually comes with costs. Lender, escrow, and title fees often add up to $4,000 to $5,000. A “no-cost” refinance means there is no upfront charge, but the costs still exist, and borrowers pay them in one of two ways: (1) the costs may be added to the loan balance, which means you are still paying them over time; or (2) the lender may cover the costs with a credit in exchange for a somewhat higher interest rate.
With the first option, where the fees are added to your balance, you generally get the lowest available interest rate. But you need to think about how long you will likely keep the loan and whether it’s worth the addition of $4,000 to $5,000 to your loan balance. For example, if you pay $5,000 in closing costs and have savings of $150 per month, then it would take nearly 3 years to recoup the closing costs. If you keep the loan (meaning you don’t move or refinance again) for longer than 3 years, then this refinance would make sense.
In an environment where rates may be trending down and you might want to refinance again, the second option is often the better move. If you can lower your interest rate and have the closing costs covered through a lender credit, a no-cost refinance makes sense. In many cases, even a quarter- to half-percent rate reduction can justify the switch. Just remember that most lenders require at least six months between refinances.
Talk it over with your favorite loan officer. If you do not already have one, feel free to reach out, and I will be happy to share some great local options.
