Is Now the Time to Refinance? Here's How to Know for Sure.

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Is Now the Time to Refinance? Here’s How to Know for Sure.

Is Now the Time to Refinance? Here's How to Know for Sure.

Rates are finally doing something interesting. The 30-year fixed has dropped below 6% for the first time in years — sitting around 5.98% as of late February 2026, with the 15-year close behind at 5.44%. If you locked in during 2022 or 2023 at 7%, 7.5%, or higher, your phone has probably already been buzzing with "now might be the time" emails from lenders you've never heard of.

Here's the thing: they're not entirely wrong. But "rates are lower" is not a financial plan. Before you call anyone, there's one calculation worth doing — and once you run it, the answer becomes surprisingly clear.

The Only Question That Actually Matters

Not "are rates lower?" Not "what are my neighbors doing?" The question is: will I stay long enough to recoup what it costs to refinance?

Refinancing isn't free. In Los Angeles, where loan balances are substantial, you're typically looking at $8,000 to $15,000 in closing costs — origination fees, title, escrow, and potentially an appraisal. Those costs get rolled into the loan, but they're real money.

The math is simple:

Total closing costs ÷ Monthly savings = Months to break even

Stay past that point, and refinancing was worth it. Sell or move before it, and you gave money away. That's the whole framework. Everything else is details.

What Closing Costs Look Like in LA

Portland homeowners might see $3,500–$6,000 to close a refi. In Los Angeles, the numbers are higher because the loans are higher.

Fee	Typical Range
Loan origination (0.5%–1% of balance)	$4,000–$9,000
Title insurance (lender's policy)	$1,000–$2,000
Escrow/closing fee	$1,500–$2,500
Recording fees	$150–$300
Credit report	$25–$50
Appraisal (if required)	$800–$1,200
Estimated total	$8,000–$15,000+

Two things can reduce this meaningfully:

Appraisal waivers. LA home values have climbed significantly over the past several years. If you have solid equity and a clean payment history, Fannie Mae and Freddie Mac's automated systems often skip the appraisal entirely — saving you $800–$1,200 without any extra effort on your part.

Lender credits. Some lenders will cover your closing costs in exchange for a rate that's about 0.125%–0.25% higher than the market floor. You're not getting something for nothing — that slightly higher rate costs you over time — but if your timeline is uncertain, avoiding out-of-pocket exposure can be the smarter trade. Ask your lender to show you both versions side by side.

Three Scenarios Worth Looking At

The Straightforward Yes

You bought in early 2023 at 7.5%. Your remaining balance is $950,000. You're not going anywhere for at least five years.

Current payment (P&I): ~$6,641/month
New payment at 5.98% (P&I): ~$5,690/month
Monthly savings: ~$951
Estimated closing costs (appraisal waived): ~$9,000
Break-even: about 9 months

After nine months, every payment is pure savings. Over five years, you're ahead by roughly $48,000 net of closing costs. There's not much to debate here.

The "It Depends" Scenario

You refinanced in mid-2023 at 7.0%. Balance is $780,000. There's a decent chance you'll move in two to three years — maybe for a bigger place, maybe for a life change you can't fully predict yet.

Current payment (P&I): ~$5,191/month
New payment at 5.98% (P&I): ~$4,672/month
Monthly savings: ~$519
Estimated closing costs (full, including appraisal): ~$12,500
Break-even: about 24 months

If you're confident you'll stay two years or more, the math works. If 18 months is more realistic, it doesn't. This is exactly when a no-cost refi structure deserves a look — your savings will be slightly smaller, but you're not betting on a timeline you're not sure about.

The Aggressive Payoff Play

Same $950,000 balance as scenario one, but you want to own the home free and clear faster — and you have the income to support a higher payment.

Current 30-year payment at 7.5%: ~$6,641/month
15-year payment at 5.44%: ~$7,734/month
Difference: ~$1,093 more per month

That additional $1,093 a month cuts your loan in half and eliminates an enormous amount of interest. On a balance like this, the lifetime interest savings between a 30-year at 7.5% and a 15-year at 5.44% easily exceeds $500,000. If you have the flexibility, it's worth asking your lender to model this alongside the standard 30-year option.

One More Thing: Jumbo Loans

A significant portion of LA homeowners are carrying balances above the conventional conforming limit. If that's you, jumbo pricing applies — rates and fees will differ somewhat from the examples above, though the break-even framework works exactly the same way. Just make sure you're working with a lender who can quote jumbo accurately, not one defaulting to conforming assumptions.

Before You Pick Up the Phone

Three things to figure out first:

How long are you realistically staying? Be honest. In LA, circumstances change — jobs shift, families grow, opportunities pull people in new directions. Your break-even math is only as good as your timeline estimate.

Has your home appreciated enough to skip the appraisal? Probably yes, especially if you've owned it for three or more years. Worth asking early in the conversation.

Do you want the standard loan or the no-cost structure? Both are legitimate. One is better if you're staying long-term; the other is better if you're not sure. A good lender will show you both without pressure.

The Bottom Line

A lower rate is an opportunity, not a directive. Whether your opportunity comes down to your balance, your rate, your timeline, and what it'll cost to make the switch. The calculation takes about ten minutes with the right lender, and the answer is almost always clearly yes or clearly no.

If you'd like a referral to a lending partner we trust to give you the real numbers, reach out to us at the Stephanie Younger Group. We're happy to make the introduction.

The Stephanie Younger Group | Los Angeles Real Estate