Is Now a Good Time to Buy or Refinance? How to Know What’s Right for You

October 24, 2025•4 min read

When the topic of interest rates swings, the question resurfaces: is now the right time to buy a home or refinance an existing mortgage? After the Federal Reserve’s rate cut expected in mid-September, many buyers and homeowners are asking: should I act now or wait? Some lenders contend that even modest savings from refinancing can outweigh closing costs if you plan to stay in your home for a few years. Others encourage waiting, arguing that rates could go lower. But waiting has its own risks—such as missing out on good inventory or losing the chance to lock in the home you love. The answer depends on your personal timeline, your goals, and how long you intend to stay in the property.

Buying: Should You Jump In?

Here are key factors to evaluate:

Timing and market dynamics
Rates currently are shifting in a narrow band but remain elevated compared to historic lows. According to industry sources, mortgage rates are moving lower but may still be several percentage points above the rock-bottom levels of previous years.

If you wait for “ideal” rates, you may find fewer good homes, more competition, and possibly higher home prices.
Your personal timeline
Buying only makes sense if you plan to stay in the home long enough to absorb the transaction costs and benefit from equity growth and rate savings.
If you’re moving in 1–2 years, the benefit may be limited. If you expect to stay for 5+ years, your decision should factor in longer-term holds.
Affordability & inventory
Even if rates dropped further, the cost of waiting may show up in home price increases, fewer choices, or bidding wars. Thus, the decision is not just about rate, but when you want to settle and what home you want.

Refinancing: When Does It Make Sense?

Refinancing can be a smart move—but only under the right conditions. Here’s how to decide:

Rate reduction and closing costs
Traditional wisdom says if you can reduce your rate by about 1 percentage point, refinancing makes sense. In today’s market, though, many experts say even smaller drops may be beneficial—depending on loan size and balance.

You must calculate the break-even point—how long until your monthly savings offset the closing/transaction costs. If you move or refinance again before you break even, you may lose money.
How long you plan to stay
If you’re staying in the home for several years, refinancing can pay off. If you expect to sell soon, the math may not work.
Other goals beyond rate
Maybe you want to shorten your loan term, switch from an adjustable-rate to fixed, or remove mortgage insurance. These goals can justify a refinance even if the rate drop is modest.

Waiting vs Acting Now: The Trade-Offs

Waiting for rates to drop further could pay off—but with caveats:

Rates might not fall much more
Though a rate cut by the Fed may be expected, mortgage rates are primarily tied to the 10-year Treasury yield, not the Fed funds rate. That means rates may not drop as much as many hope—even after a Fed cut.

Recent data show mortgage rates declined slightly but remain above 6 percent for a 30-year fixed.
Opportunity cost of waiting
By waiting, you risk rising home prices, reduced inventory, or higher competition. For refinancers, you risk extending a higher-rate period longer than necessary.
Lock-in vs float decision
If you find a favorable rate today and expect to stay in your home long enough, locking in might make sense rather than hoping rates drop further—since the timing and depth of any future rate drops are uncertain.

So, What Should You Do?

Here’s a quick checklist for your decision:

How long do you plan to stay in the home?
What is your current interest rate (if you already own)?
What rate could you realistically get now?
What are your closing/transaction costs?
What’s the break-even point (in months/years)?
What would you risk by waiting (rate increase, price increase, fewer homes)?
Are there other goals (term reduction, switching loan type, eliminating mortgage insurance)?

If you plan to stay for 5+ years, you can likely justify acting now if the numbers show savings and stability. If your stay is short, you might want to wait—or at least evaluate carefully.

Conclusion

There is no one-size-fits-all answer to “Is now a good time to buy or refinance?” The best decision depends entirely on your individual situation—how long you’ll stay, your current rate and balance, the transaction cost, and your comfort with risk. If you’d like, I can run your scenario (or your clients’ scenario) and help map out the numbers together.