Mortgage refinancing demand has surged 60% — Is now the time to refinance?

After more than a year of hovering just under 7%, mortgage rates are finally beginning to fall — and homeowners are rushing to refinance.

In the week of Sept. 12, 2025, refinance applications increased 58% over the week prior and nearly 70% over the same timeframe in 2024, according to the weekly survey from the Mortgage Bankers Association (MBA).

The rate for 30-year fixed mortgages dropped to an average of 6.39% last week, the lowest level since last October.

Homeowners responded "swiftly," according to MBA chief economist Mike Fratantoni.

"Homeowners with larger loans jumped first, as the average loan size on refinances reached its highest level in the 35-year history of our survey," Fratantoni said, adding that there was a pickup in purchase applications, as well.

The current mortgage climate has many homeowners applying for refinancing. Should you be one of them?

Here's when refinancing makes financial sense:

If you plan to stay in your home for a while. Even if you get a lower rate, it's probably not worth refinancing if you plan on selling in a few years. Closing costs on a refinance can be as high as 6%, which could eat up any savings on interest.

If you can get a significantly lower rate. Typically, it's worth refinancing if you can secure a rate that's 0.50% less than your current one. Additionally, make sure the rate is low enough to offset any closing costs.

If you have sufficient equity: The conventional wisdom is that you should have at least 20% equity in your home to secure the best rate.

You can typically get a rate-and-term refinance at any point after you take out your original mortgage. There are some exceptions:

• For a cash-out refinance, you typically must have owned the home for at least 12 months and have 20% equity.
• To refinance an FHA or VA loan, you need to make six monthly payments and have owned the home for 210 days before refinancing.
• To refinance a USDA loan, you must have paid your mortgage on time for 180 days or 12 months, depending on the type of refinancing.

You can apply for refinancing with your current lender or shop around for a better option. The first step is to get prequalified with several lenders — including banks, credit unions and fintech companies.

Interest rates change daily, so be sure to compare their offers on the same day.

Beyond just rates, though, consider closing costs, loan terms, customer service and other factors that could impact your refinance. You may also want to find out if the lender that originated your loan will also be the one to service.

If you feel overwhelmed, a mortgage broker can help you navigate the process for a fee.

One of our top picks, Better is known for its lower-than-average rates — and it will pay you $3,500 in lender-paid credits for closing costs if you decide to refinance within three years, which may be ideal as rates are on their way down.

You can get prequalified with Rocket Mortgage in minutes and cash in on the full value of your house. Borrowers typically need a 620 FICO score and a debt-to-income ratio of 50% or less.

SoFi offers fixed-rate terms from 10 to 30 years. If you have an existing loan or $50,000 in a SoFi Invest account, you can get a $500 rebate on your processing fee.

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