Buying a home between 2022 and 2024 likely meant taking on a mortgage during a period of rising interest rates.
While many buyers rushed to beat rising costs, others had limited choices as housing demand stayed high.
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Now, in 2026, interest rates are showing signs of stabilizing, and in some cases, dropping. Understandably, many recent buyers are asking, “Should I refinance my mortgage?“
This guide breaks down everything you need to know if you bought your home in the past few years and are considering refinancing. We’ll cover when refinancing makes sense, how to calculate savings and how Compass Mortgage can help.
How mortgage rates have shifted since 2022
After historically low rates during the pandemic, mortgage rates began rising rapidly in 2022 due to inflation and Federal Reserve action. Many homeowners who bought during 2022–2024 locked in rates between 5.5% and 7%.
As we enter 2026, rates have begun to level off or even decline in specific markets. That shift is reopening refinancing opportunities, particularly for those who locked in during the rate peaks.
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Who should consider refinancing?
Refinancing isn’t a one-size-fits-all solution. Your decision should be based on your personal financial goals, how long you plan to stay in your home and the terms and conditions of your current mortgage.
Here’s a quick breakdown of when refinancing might work in your favor—and when it might not.
You may benefit from refinancing if…
- Your current interest rate is 0.75% to 1% higher than today’s average
- You want to lower your monthly mortgage payment
- You want to switch from an adjustable-rate (ARM) to a fixed-rate mortgage (FRM)
- Your home has appreciated, and you now have 20% or more equity
- You want to shorten your loan term or tap into home equity
You may want to wait to refinance if…
- You plan to sell your home within the next one to two years
- You already have a competitive fixed-rate loan
- Your credit score or income situation has declined
- The cost of refinancing outweighs the benefit
Key refinance factors to consider
Several key variables affect whether refinancing is a smart move.
Before making a decision, consider how your current mortgage, financial profile and home equity line up with your future goals.
These factors help determine if refinancing makes sense now or in the near future.
1. Current rate vs. market rate
Even a 0.75% drop in your mortgage interest rate can result in hundreds of dollars in monthly savings.
A drop from 6.5% to 5.5% could be worth exploring, depending on your loan size and timeline.
Compass Mortgage offers online refinance calculators that provide quick estimates.
2. Loan term and financial goals
Refinancing isn’t just about lowering rates. If you’re looking to pay off your mortgage faster, switching from a 30-year to a 15-year term could save you tens of thousands in interest over the life of a mortgage loan.
On the other hand, extending your loan term may free up monthly cash.
3. Home equity and property value
Equity is key when refinancing. If your home’s value has increased and you’ve paid down your mortgage, you may qualify for better terms and conditions or even eliminate private mortgage insurance (PMI).
A cash-out refinance is also an option if you want to leverage your equity for renovations, debt consolidation or other goals.
4. Credit score and debt-to-income ratio (DTI)
Lenders will review your credit score and financial profile (including your DTI) to determine your eligibility and interest rate.
5. Refinance costs and break-even point
Refinancing comes with closing costs, often ranging from 2% to 5% of the loan amount.
Calculate your break-even point, which is how long it takes your savings to cover refinancing costs.
Popular refinance options for 2022–2024 buyers
Depending on your original loan type and current needs, several refinance products are available.
These loan options can help lower your rate, adjust your loan term, or tap into your home equity:
- Conventional refinance: Ideal for borrowers with strong credit and equity. Options include rate-and-term or cash-out refinancing.
- FHA Streamline refinance: Designed for current FHA loan holders. Minimal documentation and often no appraisal needed.
- Cash-out refinance: Replaces your existing loan with a larger one, giving you access to your home’s equity in cash.
- VA IRRRL (Interest Rate Reduction Refinance Loan): For eligible veterans or active service members with VA loans. Offers a simplified process with lower costs.
Should you refinance now or wait?
Timing a refinance depends on your goals and market conditions.
While no one can predict rates with certainty, here are a few considerations:
- Rate trajectory: If rates have dropped significantly since you bought, now might be the right time.
- Seasonal timing: Spring and fall are standard times for refinancing, aligning with tax seasons and home improvement cycles.
- Preparation: Even if you’re not ready to refinance today, gathering your documents and speaking to a loan officer can prepare you for a fast move when the time is right.
FAQ: The right time to refinance your mortgage
Refinance closing costs typically range from 2% to 5% of the loan amount. These costs include lender fees, appraisal fees, title insurance and other third-party services.
It depends on your loan type and current equity. Some government-backed refinance programs, like FHA Streamline or VA IRRRL, may still be available even with reduced equity.
A 1% drop in interest rate can significantly reduce your monthly payments and total interest you expend over the life of the loan. Always calculate your break-even point to see if the savings outweigh the costs.
Refinancing can temporarily affect your credit score due to a requisite credit inquiry (with the national credit bureaus) and the creation of a new account. However, responsible repayment of the new loan can help your credit recover and improve over time.
Yes. You can refinance with your current lender or shop around for better rates and terms with other lenders. Contact Compass Mortgage to speak with one of our knowledgeable loan officers and learn about our competitive rates and term length options.
Compass Mortgage’s Get Committed® program advantage
Compass Mortgage offers more than standard refinancing tools. With our distinctive Get Committed® program, you can go beyond a preapproval and receive a fully underwritten loan commitment.
This allows you to:
- Lock in your interest rate before you begin house hunting or refinancing
- Avoid surprises or delays in the approval process
- Compete with cash buyers in the market
- Close in as little as 15 days
Learn more about Get Committed®
Next steps: Talk to a loan officer about refinancing today
If you bought your home in 2022, 2023 or early 2024, now might be the ideal time to review your mortgage.
Whether you’re hoping to lower your payment, pay off your loan faster or access your home equity, a refinance could be your next smart financial move.
Compass Mortgage can help you evaluate your options and determine if refinancing aligns with your financial goals. Apply for refinance now or call us at (877) 635-9795 to speak with one of our knowledgeable, accommodating loan officers.