Refinancing can be one of the smartest moves you make as a homeowner — but only if it actually works in your favor. The average mortgage in the U.S. only lasts 5–7 years because most homeowners either refinance or sell before ever reaching the end of their loan term. That means the decision to refinance should be based on return on investment (ROI) rather than just the promise of a lower rate.

 

✅ WHEN IT MAKES SENSE TO REFINANCE

If you can recoup the cost of refinancing within 24 months, it’s worth serious consideration. Not sure how to calculate that? Give me a call — I can walk you through your options., but here’s how to do it:

• If your refinance fees total $4,000 and your new monthly payment saves you $200, you’ll break even in 20 months — that’s a good ROI.
• Lower interest rates can shorten your payoff timeline and reduce total interest paid.
• Moving from a 30-year mortgage to a 15-year mortgage can save tens of thousands of dollars and help you become debt-free faster.

 

Avoid points (pre-paying interest): Never buy down your interest rate with points unless the seller is covering the cost during the purchase period. Buying points usually means paying the bank for services not rendered. Here’s how:

If buying points costs you $5,000 to save $75/month, it will take more than 5 years just to break even — and most people will refinance or sell before then. If you sold in 4 years, you would have paid the bank an extra $900 for nothing. Honestly, if you want to give away $900 then call me and I’ll make an easier arrangement for you with much less paperwork. But if the seller credits you those same points, you get the benefit of the lower payment without spending your own cash upfront – it’s free money for you.

 

❌ WHEN TO HOLD OFF

Refinancing isn’t always the right move. If you plan to sell soon, you may not have enough time to recover the upfront costs.

• If your rate drop is minimal, the savings might not justify the closing costs. Remember, the only reason to refinance is to get a return on your investment.
• If you’re tempted to restart a 30-year term, think twice. Extending the life of your loan usually means paying tens of thousands more in interest.

Remember Proverbs 22:7 — “The borrower is slave to the lender.” Debt should be temporary, not permanent. If you extend your mortgage, you may find yourself still in debt years later — working for the lender instead of working toward freedom. Statistically, you’re more likely to win the lottery than obtaining freedom this way.

 

💡 THE HAEFER HOMES RECOMMENDATION

I recommend sticking with a 15-year mortgage. While you could choose a 30-year loan and plan to make double payments, life has a way of testing that commitment. Temptation will always compete for those extra dollars, and good intentions alone rarely pay off a house. As the old saying goes, “The road to hell is paved with good intentions.” A 15-year mortgage builds discipline into the plan and keeps you on track to be debt-free faster.

And a 15-year payment is NOT DOUBLE a 30-year payment. With today’s reported rates, a $300,000 mortgage on a 15yr loan is only $155.43 more than a 30yr loan – the average American spends $167 a month at Starbucks.

 

📚 Want to go deeper? Our upcoming Ramsey Solutions Financial Peace University course will teach you how to eliminate your debt in 10 years or less. You can also subscribe to the Keys to Cashflow newsletter to learn step-by-step how to acquire your investment properties with minimum risk and maximum results.