Refinancing your mortgage is a personal finance decision where timing, numbers, and financial goals matter. After the sharp rate drops during the pandemic, the housing market in 2026 and mortgage rates remain higher, but there are still situations where refinancing can make sense for military families.
It's important to consider what's currently happening in the housing market when learning about home financing options, including refinancing your mortgage.
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Should I Consider Refinancing My Home?
For those unfamiliar with the term, refinancing allows you to replace your current home loan with a new one. But why would someone want to refinance their home?
Refinancing serves several purposes:
- Lower your interest rate
- Reduce your monthly payment
- Switch from an adjustable rate to a fixed rate or vice versa
- Shorten or change your loan term
- Tap into your home equity (cash-out refinance)
However, refinancing may not result in a better financial outcome. Sometimes, if your credit score is lower than when you originally bought the home, the switch to a 15-year from a 30-year loan can tighten your monthly spending, and effects from the housing market can cause you to fall deeper into debt.
When Refinancing Makes Sense in Today’s Market
Current mortgage rates are lower than last year, but still much higher than during the pandemic. On average, a 30-year fixed mortgage is right around the 6% range, while shorter 15-year fixed loans usually fall in the mid-5% range.
VA refinancing loans are lower than conventional rates. Many 30-year VA refinance rates run in the 5-6% range, and 15-year rates sit in the low 5% in many national averages.
Refinancing can be a smart financial move in today’s housing market, but it works best when there’s a clear reason behind it, and it's not just because mortgage rates dipped slightly. Here's what to look for when deciding if refinancing supports your financial situation and goals.
1. When a Lower Rate Positively Impacts Your Monthly Budget
If your current mortgage rate is noticeably higher than what’s available today, refinancing may reduce your monthly payment enough to be worth it. This is especially true for homeowners who bought during periods of elevated rates, and who plan to stay in the home long enough to offset closing costs.
2. When Stability Matters More Than the Lowest Possible Rate
If you bought your home with an adjustable-rate mortgage, using other home financing options to get a fixed-rate loan can be helpful. Locking in a predictable payment protects against future rate increases, and it simplifies budgeting.
3. When Your Financial Profile Has Improved
Some buyers purchased their home with a less than perfect credit score, and the terms of their loan weren't ideal. If you’ve taken the time to rebuild your credit, VA refinancing loans can help you qualify for a loan that offers more favorable terms, like lower rates or the removal of certain fees.
4. When You Want to Change Your Loan Strategy
Sometimes, the goal of refinancing isn't to lower payments. Some homeowners shorten their loan term to build equity faster and reduce long-term interest costs. Others opt for a different structure that works better with their goals, like paying off the home before retirement or reducing financial obligations ahead of a planned PCS.
However, if your home loan doesn't have any prepayment penalty fees, you may not need to refinance to accomplish this.
5. When Home Equity Supports a Larger Financial Goal
If you already have equity, a cash-out refinance can be a tool for consolidating higher-interest debt, funding home improvements, or preparing for your next military move. Used carefully, it can simplify finances, but only when the long-term cost is compatible with future goals. That may include keeping the property as a rental investment or returning to it after military retirement.
6. When Your Timeline Supports the Break-Even Point
Refinancing makes sense when you expect to remain in the home long enough to reach the break-even point. For military homeowners, this often means weighing potential PCS timelines, the likelihood of renting the home later, and whether the refinance still makes sense even if plans change.
When You Shouldn't Refinance Your Home
Refinancing can be a useful tool for homeowners, but it isn’t the right choice for every situation
If your mortgage rate is already close to or below what's currently available, the potential savings may not outweigh closing costs. A refinance that only offers a slight improvement rarely pays off.
If you expect to sell, PCS, or relocate before you’ve had time to break even on the closing costs, refinancing doesn’t usually make sense.
Refinancing can also lead to less favorable terms if your credit score or debt-to-income ratio has declined since you bought the home. Lenders will base their offer on your current financial picture, not your past one.
Refinancing in today’s market isn’t about timing a perfect rate; it’s about how a new loan aligns with your long-term goals. For military homeowners who move frequently, the right answer depends on your interest rate, available equity, and how long you plan to stay put.
Taking a few minutes to run the numbers, consider your PCS timeline, and compare home financing options can help you decide whether refinancing is the right move now or something better revisited later.
