Should You Refinance in 2025? When It Actually Makes Sense

🔁 Refinancing in 2025: When Does It Actually Make Sense?

Interest rates are shifting, equity is growing, and homeowners across Central Florida are wondering: Should I refinance?

The truth is—refinancing can be a powerful financial move, but only when the math (and your goals) make sense. Whether you're looking to lower your payment, cash out equity, or ditch PMI, here’s what you need to know about refinancing in 2025.

💰 1. You Can Drop Your Interest Rate by 1% or More

📍 Applies to anyone who bought during higher-rate windows (2022–2024)

Why it matters:

• A 1% drop in rate could save you $200–$400/month depending on your loan size
  
  
• You’ll pay less interest over the life of the loan
  
  
• You can sometimes shorten your term from 30 to 20 or 15 years
  
  

📉 Even a half-percent drop can make sense in the right scenario—talk to a lender.

🏡 2. You Have Enough Equity to Eliminate PMI

📍 Especially common for buyers who put down less than 20%

What to check:

• You’ll typically need 20% equity based on a new appraisal
  
  
• If your home has gained value, this may be easier than you think
  
  
• Dropping PMI can save you $100–$250/month in some cases
  
  

🔎 Use a recent comp or request a lender evaluation to estimate your equity.

💳 3. You Want to Consolidate Debt or Fund a Big Expense

📍 Common in areas with fast appreciation like Lake Mary, DeBary, and Winter Park

Refinancing may help you:

• Pay off high-interest credit cards or loans
  
  
• Access equity for renovations, college, or medical needs
  
  
• Avoid taking out higher-interest personal loans
  
  

💸 Cash-out refinances come with higher rates—but can still be a smart trade-off.

📆 4. You're Planning to Stay Put for 3–5+ Years

📍 Applies to homeowners ready to settle in or build wealth through their home

Why timing matters:

• Most refinances come with $3,000–$5,000 in closing costs
  
  
• You’ll want to stay long enough to break even on your savings
  
  
• If you're moving in 1–2 years, a refinance usually doesn’t make sense
  
  

🧮 Use a refinance calculator to compare monthly savings vs. upfront costs.

⚠️ When Refinancing May Not Be Worth It

• If you’re planning to move or sell soon
  
  
• If your new rate is only slightly better
  
  
• If your credit score has dropped significantly
  
  
• If closing costs outweigh your long-term savings
  
  

📌 Don’t just chase a lower rate—make sure the numbers and your goals align.

🏡 Final Thought:

Refinancing isn’t a one-size-fits-all move—it’s a strategic decision that should fit your budget, goals, and timeline. In 2025, with home values holding strong and rates shifting, now may be the perfect time to re-evaluate your mortgage.

Want to crunch the numbers with a trusted local expert? The Peterson Group can connect you with top lenders and walk you through your options—no pressure, just smart advice.