If you recently bought your first home and you’re looking at interest rates thinking, “Did I mess up by buying too soon?” the answer is no, and you actually have a chance to turn this into a long-term win.

A lot of people wait for the perfect interest rate before refinancing. They don’t want to pull the trigger unless the new rate is way lower, or unless they can “get the best deal.” But here’s the thing. You don’t need to wait for perfect. If you can refinance at no cost to you and lower your interest rate, even just a little, that’s a smart move every time.

And when I say no cost, I don't just mean no money out of pocket, I don't mean big closing costs rolled into your loan balance. Just a straight $0 loan cost refinance where your rate goes down and your equity stays untouched.

Here's an example:

1. Say your rate is at 7.5% (maybe you bought in October 2023).
2. Say the headline on the internet is "6.5% rates!"
3. Say your lender offers to get the rate to 6.25%
4. Ignore it

I want you to ignore the noise. In this case, the 6.25% likely has a buydown cost. The 6.5% might not have a buydown cost, but it may still come with your typical lender fees: underwriting, title, processing etc.

Ignore it!

Ask what it will take to get to $0 cost. No underwriting fee, no processing fee, no title fees.

What happens is as you offer to take a higher-than-market rate, the lender will offer you an upfront credit to offset your closing costs.

Let's pretend that rate, the $0 cost rate, is 6.875%

It's not as flashy as the 6.25% or 6.5%, but it lowers your interest, and you don't get hit with high costs.

Take that option. Every time.

Then if rates go down again, you do it again. No closing costs. No sunk cost fallacy. Just keep improving your position when it makes sense. There’s no penalty for being smart early.

Yes, you’ll get a slightly higher rate than the one they advertise online, but if that new rate is still better than what you have today and you’re not paying to get it, what’s the downside?

You’re not trying to win some kind of rate timing game. You’re just building equity and lowering your monthly obligation as often as the market allows, with no damage done in the process. And that’s the key, no damage. You don’t give up cash or equity, so you keep flexibility and can always refinance again when it makes sense.

Rates could keep dropping. You don't want to kick yourself for refinancing 2 times in 2 years.

"But I don't want to reset the clock and go back to 30 years"

Then don't. You aren't forced to pay the minimum payment. That 30 years is assuming that you only pay the minimum.

If you lowered your rate, but kept making the exact same payment you were making before, you're going to pay it off faster.

Not just faster than the 30 years. You'll pay it off faster than your original loan.

Anything extra you pay goes directly toward your principal balance owed.

If you don't want to reset the clock, you have two options after a refinance:

1. Pay the same amount as before, paying it off much earlier
2. Calculate how much time you had left, then calculate what kind of payment that takes

That second option is interesting. You'll keep yourself on the same schedule, but you'll have a slightly lower payment.

Here's an example

• a $400,000.00 loan at 7.5% has a principal and interest payment of $2,797.00
• After 12 payments, that new balance will be $396,631.00
• A $396,631.00 loan at 30 years and 6.8% rate has a payment of $2,586.00
• But, you don't want to pay it over 30 years. You want the same 29 schedule
• $396,361.00 at a 29 year term, at 6.875% rate has a payment of $2,613

Problem solved.

You can stay at 29 years, pay a lower rate, and pay $184 less per month.

And all at $0 cost.

If you want a calculator to see what the principal and interest payment would be at a specific term (by the year) then use this:

Payment

This works best for people who bought when rates were high, who plan to stay in their home at least a year or two, and who didn’t already pay points on their original loan. If that’s you, this is a strategy worth looking into.

And if you’re not sure how to structure it, or you want someone to look at your numbers and see if it makes sense to refinance now, feel free to ask. There are a lot of ways to win with a mortgage, but this is one of the easiest when you understand how it works.

If you need a connection to a mortgage broker who can help you structure a refinance this way, fill out this form.