Key takeaways
- Refinancing your mortgage may make sense if you can reduce the interest rate by at least half a percentage point.
- Improving your credit score is one way to get the best mortgage refinance rate.
- You can also consider buying discount points or paying your closing costs upfront to reduce the interest rate.
Watching mortgage rate movement has turned into a waiting game for millions of homeowners looking to refinance. Mortgage rates have risen from their 2026 low of 6.09%, though they remain below the 7% levels seen in early 2025. That said, if your current mortgage is locked in at a higher rate, a dip could make refinancing worth exploring.
Homeowners may consider refinancing if they can lower their rate by at least half a percentage point, or ideally closer to a full percentage point, says Ted Rossman, financial analyst at Bankrate. “The tactic makes the most sense if you have a high mortgage balance and plan to stick around a while, since refinancing costs money and the process can be cumbersome,” he says.
The main aim of a refi, after all, is to lower your monthly mortgage payment and pay less interest over the loan term. Here are some strategies on how to shop for the best refinance rates.
How to get the best refinance rate
Each of these steps can steer you toward a refinance rate that lowers your monthly payments. Keep in mind that approval and your actual rate offer will also depend on your home, location and current mortgage rate trends.
1. Improve your credit score
A better credit score generally means lower rates. One of the quickest ways to improve your credit score is to correct errors on your credit report. Even small mistakes can drag down your score. Other strategies, like tackling large credit card balances or making payments on time, may take longer but are also highly effective.
“If there is room for improvement, increasing your score or reducing other debts might help you secure better rates or loan terms when you refinance,” says Stephen Kates, Bankrate financial analyst.
2. Compare refinance rates
To score the cheapest refinance rates, compare as many mortgage offers as possible. Even a fractional difference can save you thousands.
When you compare interest rates, also consider the APR, or annual percentage rate, which encompasses annual fees and gives you a better idea of the true cost. You may find that the mortgage refi lender with the lowest advertised rate has higher fees and closing costs that actually make the loan’s APR higher than those of competitors.
Rossman suggests shopping around aggressively. “Don’t settle for average,” he says. “You can beat the average rate by at least half a percentage point if you shop for the best deal and have a strong credit score.”
3. Buy points to get the lowest refinance rates
With mortgage points, you pay the lender upfront for a lower rate over the life of the loan. One point is equal to 1% of the loan amount.
“Buying points can make sense when you plan to keep the mortgage long enough to recoup the upfront cost,” says Kates. “The key question is whether the monthly and total interest savings will exceed the upfront cost before you move, refinance or pay off the loan.”
Lenders offer a variety of ways to buy points when refinancing. When comparing offers, always ask lenders to show you options with and without points to see which one makes the most sense.
4. Determine which loan term is best
Shopping for a mortgage refinance — or comparing any loan — is about striking a balance between affordability and long-term savings.
Shorter loans, such as a 10-year fixed or 15-year fixed, carry lower rates than longer loans, help you build equity faster and save thousands of dollars in interest. The tradeoff is much higher payments, which can be problematic if your financial situation changes, like losing your job.
Choosing a longer term, like a 30-year mortgage, will lower your monthly payments and offer you more breathing room month to month. However, you will pay more in interest over the life of the loan.
| Loan term | Loan amount | Interest rate (APR) | Monthly payment | Total interest paid |
| 30 years | $300,000 | 6.00% | $1,799 | $347,515 |
| 20 years | $300,000 | 6.00% | $2,149 | $215,728 |
| 15 years | $300,000 | 6.00% | $2,532 | $155,683 |
| 10 years | $300,000 | 6.00% | $3,330 | $99,627 |
5. Choose a fixed interest rate
Many homeowners will choose a 15- or 30-year loan when they refinance, but they still need to decide between a fixed or a variable interest rate.
With a variable or adjustable-rate mortgage (ARM), the interest rate changes at predetermined intervals based on the market and a margin determined by the lender. So, while your interest rate can decrease at those times, it can also increase substantially — making a fixed-rate loan generally less risky and easier to qualify for than an ARM.
A fixed-rate loan stays the same for the loan’s duration and can help consumers budget more easily. But if you only plan to live a few years in your home or expect to move before your loan is repaid, an ARM can be the better move.
6. Consider the loan amount
When crunching the numbers, look beyond the immediate cost and consider the long-term financial impact of your loan. For example, a homeowner financing a $250,000 home at a 6% interest rate over 30 years with a 10% down payment would pay about $1,349 per month. By increasing the down payment to 20%, it lowers the monthly payment to roughly $1,199.
Borrowers need to fully understand the terms of their mortgage loan, as well. Utilize online calculators to help make decisions and find a mortgage that best suits your needs.
7. Pay closing costs upfront
The closing costs you’ll pay vary by lender, loan amount and location, but it’s generally 2% to 5% of the new loan amount. So, if you want to refinance a $400,000 home loan, you’ll typically pay between $8,000 and $20,000 in closing costs. You may be able to negotiate these expenses to some extent.
Some lenders offer to roll closing costs into the loan, but there’s a catch. You’ll likely have to pay a higher interest rate to secure a no-closing-cost refinance loan, which means your mortgage payment will be higher. Furthermore, you’ll pay the lender more in interest because you’ll be paying interest on these closing costs over the loan term.
To illustrate, the lender could offer to refinance your $400,000 home loan with a 30-year term at 6% APR, charging you $13,000 in closing costs. Or you could get a no-closing-cost refinance with the same loan term, but with a 6.5% APR.
If you go with the refinance that has the lower interest rate, you’ll pay $1,919 per month in principal and interest and $370,682 in interest for the loan’s duration. But if you opt for zero closing costs, your monthly mortgage payment will increase to $2,023, and you’ll pay a total of $407,182 in interest.
How do I know if my refinance rate is worth it?
If you can bring your mortgage rate down by a half to a full percentage point, refinancing is often a good move. But deciding whether a refinance shouldn’t just be about lowering your rate. What really matters is whether a refinance saves you more money than it costs. If the math works out so that you break even in a few years and your payment drops enough to make a real difference, the rate is probably worth it.
FAQ about getting the best refinance rate
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