Buying and Selling

When is the right time to refinance?

Understand how interest rates—and your big-picture goals—can play a role

Couple smiling sitting on the couch

Refinancing your home is a big decision to make—and while interest rates are at the heart of it, they don’t make up the whole picture. Joshua Feldman, senior mortgage loan officer at SunTrust Mortgage, provides insight into how you should evaluate the current interest rate environment, as well as your values and financial goals, when trying to decide if and when refinancing is right for you.

How can refinancing help people reach their financial goals?

Refinancing your loan can potentially help you lower your payment or change the life of the loan. Maybe you want to pay off the loan faster so you don’t have to worry about it when you retire, or maybe you want a longer-term loan, which would provide the flexibility of a lower monthly payment to spend or save your money in other ways.

A cash-out refinance may be an option for some to turn equity they’ve built in their house into cash that can be used to fund a big expense, like a home improvement project or a child’s college tuition.

How would you describe the current interest rate environment?

The general feeling is that interest rates are going to continue to rise over the next 12 months. When the stock market is doing well and the economy looks like it’s headed in the right direction, rates tend to move higher. So while I do think we’re still at a low point comparatively to what rates were 10 or 20 years ago, rates are on the rise. That said, one product of a strengthening economy is that home prices are also on the rise. As values appreciate, people may look for opportunities to leverage that newly accumulated equity in their home.

How does that outlook play a role when people are deciding to refinance?

If your primary goal is to lower your payments, it makes sense to think about refinancing when the current interest rates are lower than the rate you currently have. Homeowners will also want to look into what closing costs would be, to make sure the interest-rate savings would offset the necessary upfront cash.

If you’re looking to shorten your loan term, say going from a 30-year loan to a 20-, 15- or a 10-year loan, those rates are generally going to be lower than a traditional 30-year-fixed in most interest rate environments. This change can save you money in the long run.

When might it make sense to refinance to a higher interest rate?

There are other reasons unrelated to the rate environment that cause people to consider refinancing. A lot of people who call me now are six or seven years into an adjustable rate mortgage (ARM), and if they were to refinance, they would be refinancing to a higher interest rate. If they are going to be in that house for the foreseeable future, then I absolutely would consider refinancing to a fixed-rate loan, so they don’t have to worry about the rate adjusting every year.

Another time you may consider refinancing to higher rate is to consolidate high interest debt for overall interest savings, one easy payment and a better tax deduction.  However, you should consult a financial advisor for advice regarding tax details and the advisability of converting other debt into debt secured by your home. 

Why is it important to talk with a mortgage lender when considering refinancing?

You may have an idea of what you’ll accomplish by refinancing, but a mortgage lender can help you weigh all the pros and cons to help you decide if a refinance really makes sense for you. They’ll ask you questions to understand your goals and motivations, like how long you’ll stay in the home, and they can help you find a breakeven point where a refinance makes sense.

Looking at a calculator online is just one small piece of the puzzle. You really need to talk to someone so you understand what’s important and how your financial goals play a role.

Own your future

Refinancing your home can help meet your everyday goals. Learn more about refinancing

This content does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.


Investment and Insurance Products:

Are Not FDIC or any other Government Agency Insured   Are Not Bank Guaranteed  May Lose Value 

© 2018 SunTrust Banks, Inc

equal housing logoSunTrust Bank is an Equal Housing Lender. Member FDIC

equal housing logoEqual Housing Lender. SunTrust Mortgage, Inc

SunTrust, SunTrust Mortgage, SunTrust PortfolioView, SunTrust Robinson Humphrey, SunTrust Premier Program, AMC Pinnacle, AMC Premier, Access 3, Signature Advantage Brokerage, Custom Choice Loan and SunTrust SummitView are federally registered service marks of SunTrust Banks, Inc. All other trademarks are the property of their respective owners.

Services provided by the following affiliates of SunTrust Banks, Inc.: Banking products and services are provided by SunTrust Bank, Member FDIC. Trust and investment management services are provided by SunTrust Bank, SunTrust Delaware Trust Company and SunTrust Banks Trust Company (Cayman) Limited. Securities, brokerage accounts and insurance (including annuities) are offered by SunTrust Investment Services, Inc., a SEC registered broker-dealer, member FINRA, SIPC, and a licensed insurance agency. Investment advisory services are offered by SunTrust Advisory Services, Inc., a SEC registered adviser. GFO Advisory Services, LLC is a SEC registered investment adviser that provides investment advisory services to a group of private investment funds and other non-investment advisory services to affiliates. Mortgage products and services are provided by SunTrust Mortgage, Inc.

SunTrust Mortgage, Inc. - NMLS #2915, 901 Semmes Avenue, Richmond, VA 23224, 1-800-634-7928. CA: licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act, IL: Illinois Residential Mortgage Licensee #MB-989, Department of Financial and Professional Regulation, 100 W. Randolph, Suite 900, Chicago, IL 60601, 1-888-473-4858, MA: Mortgage Lender license #-ML-2915, NJ: Mortgage Banker License - New Jersey Department of Banking and Insurance, NY: Licensed Mortgage Banker—NYS Department of Financial Services, and RI: Rhode Island Licensed Lender.

"SunTrust Advisors" may be officers and/or associated persons of the following affiliates of SunTrust Banks, Inc.: SunTrust Bank, our commercial bank, which provides banking, trust and asset management services; SunTrust Investment Services, Inc., a registered broker-dealer, which is a member of FINRA and SIPC, and a licensed insurance agency, and which provides securities, annuities and life insurance products; SunTrust Advisory Services, Inc., a SEC registered investment adviser which provides Investment Advisory services.

SunTrust Private Wealth Management, International Wealth Management, Business Owner Specialty Group, Sports and Entertainment Group, and Legal and Medical Specialty Groups and GenSpring are marketing names used by SunTrust Bank, SunTrust Banks Trust Company (Cayman) Limited, SunTrust Delaware Trust Company, SunTrust Investment Services, Inc., and SunTrust Advisory Services, Inc.

SunTrust Bank and its affiliates do not accept fiduciary responsibility for all banking and investment account types offered. Please consult with your SunTrust representative to determine whether SunTrust and its affiliates have agreed to accept fiduciary responsibility for your account(s) and if you have completed the documentation necessary to establish a fiduciary relationship with SunTrust Bank or an affiliate. Additional information regarding account types and important disclosures may be found at

SunTrust Robinson Humphrey is the trade name for the corporate and investment banking services of SunTrust Banks, Inc. and its subsidiaries, including SunTrust Robinson Humphrey, Inc., member FINRA and SIPC.