Does a mortgage refinance make sense after you have made many years of payments, such as 10 or 15? The answer will mostly depend on your financial goals for the new loan and how long you want to stay in that house. The RefiGuide can connect you with the best refinance lenders with no application fee or obligation.

There are several major benefits to mortgage refinancing:

  • You can reduce your monthly payment by getting a lower mortgage rate
  • You can get another type of loan product
  • You can put two mortgage into one
  • You can pay down your loan faster

Whether it makes sense to refinance after 10 years will come down to answering these questions:

Will a Refinance After 10 Years Save Me Money?

You need to calculate all costs and possible savings before you decide if a refinance will save you. Savings from a refinance go beyond just the break even point where you start to save money after closing costs are considered. If you want to sell your house in three years, you may not have enough time to break even.

You may refinance without out of pocket costs, but there is no break even point as the refinance did not cost you money out of pocket. That said, there is a lesser cut in your monthly payment because your no cost refinance has a higher interest rate and possible bigger loan balance. (HSH.com)

What Is the Breakeven Point?

The breakeven period represents the duration required to recoup the closing costs associated with a new mortgage, allowing you to begin enjoying the savings from a reduced interest rate and lower monthly payments. According to Andrews, the breakeven period being two years or less is typically the threshold for refinancing to be financially beneficial for most individuals.

Understanding the breakeven period is essential in determining the feasibility of refinancing. If you have a remaining mortgage term of 10 years and are contemplating refinancing, our recommendation is to opt for a 10-year mortgage with 120 months. This approach aligns with the breakeven principle, ensuring that the costs incurred during refinancing are recovered within a reasonable timeframe.

It’s crucial to consider whether refinancing will result in long-term cost savings. If the breakeven period indicates that you will ultimately spend more over time, opting for refinancing only makes sense if you prioritize the flexibility that lower monthly payments provide. Without a clear need for improved budget flexibility, committing to additional decades of mortgage payments may not be advantageous.

Will the Lower Rate Save Me Money?

A loan officer can fool you into thinking that you will save money with the lower rate alone. But this figure is not always right in terms of real savings. If your loan is just a few years old, and you can refinance to a lower rate, such as one point lower, making your term longer only has minimal effects. But if you are 10 years into your mortgage and trade a lower rate for a longer term, you may not be saving much money. You might even cost yourself more. See 15 year vs 30 year mortgage differences.

Do I Need to Refinance with My Current Lender?

No. In fact, you are smart to get quotes on a refinance from other lenders before speaking to your current lender. Some lenders do have retention programs they use to prevent homeowners from leaving the fold and going with another lender. But the deals offered may not be as good as what you find by shopping around. Also, your lender could have less of an incentive to close your deal fast because it already has you as a client with a higher rate.

Will Your Home Value Affect the Refinance?

If the value of your home is lower, even if you are underwater, there are some refinance options available. But you have to know how much equity is in the property. Your agent can give you an idea of your home’s current value. Once you have that data, you can divide the loan balance by the home’s value to get your loan to value or LTV. So, if you have a home with a value of $200,000 and the balance is $150,000, the LTV is 75%.

Will My Credit Score Affect My Refinance?

Tighter loan standards today make it harder to refinance when you have a lower credit score. To get the best refinance rates, you will find you need to have a FICO of 740 or higher. It is possible to get a Fannie Mae or Freddie Mac backed refinance loan with a low credit score of 620, but there will be higher fees and rate that reduce the benefit of refinancing. Read more about what credit score you need for a mortgage refinance today.

Should I Get a No-Cost Refinance?

There is no such thing, in reality. The costs will always be rolled into the balance and are paid by you. Or they are taken by the lender and they charge you a higher rate. A no closing cost refinance mortgage is not always bad, but if you want to make your refinance on your mortgage that you have paid 10 years on to really pay, it makes sense to pay the closing costs yourself.

11 Reasons to Refinance a Mortgage After 10 Years

Refinancing a mortgage after a 10 years can be a strategic financial move, especially in 2025 when average 30-year fixed refinance rates hover around 6.8%, slightly above 2024 levels but still offering opportunities for savings amid steady economic conditions.

By this point, homeowners often have built substantial equity, improved their credit, or seen life changes that make revisiting loan terms worthwhile. While closing costs (typically 2-5% of the loan) and break-even periods must be considered, refinancing can lower payments, access cash, or accelerate payoff.

With rates inching up to 6.939% as of July 18, 2025, acting soon could lock in benefits before further shifts. Below are 11 compelling reasons, followed by real-world case studies.

  1. Secure a Lower Interest Rate: If rates have dropped since your original loan, refinancing can save thousands. For instance, reducing from 7% to 6.72% on a $300,000 loan cuts monthly payments by about $200.
  2. Reduce Monthly Payments: Extending the term or lowering rates frees up cash flow for investments or emergencies, ideal after 10 years of building equity.
  3. Shorten the Loan Term: Switch to a 15- or 20-year mortgage to pay off faster and save on interest, leveraging lower 15-year rates around 6%.fvsbank.
  4. Switch from ARM to Fixed-Rate: After 10 years, adjustable-rate mortgages (ARMs) may reset higher; refinancing to a fixed rate provides stability in a volatile market.
  5. Cash-Out Equity: Tap into built-up home value for renovations, debt payoff, or investments, with equity often reaching 50% after a decade.
  6. Remove Private Mortgage Insurance (PMI): If equity exceeds 20%, eliminate PMI, saving $100-300 monthly, a common milestone around year 10.
  7. Consolidate Debt: Roll high-interest debts like credit cards into your mortgage at lower rates, simplifying finances post-10 years.
  8. Benefit from Improved Credit Score: Better credit after years of on-time payments qualifies for premium rates, reducing costs significantly.
  9. Capitalize on Increased Home Value: Rising property values allow better loan-to-value ratios, enabling favorable terms or larger cash-outs.
  10. Adjust for Life Changes: Marriage, kids, or job shifts may necessitate lower payments or cash access, making refinancing timely after a decade.
  11. Avoid Fixed-Rate Period Expiration: If your loan’s introductory rate ends, refinance to prevent hikes, securing long-term predictability.

These reasons highlight refinancing’s potential, but calculate break-even points to ensure viability.

Case Study: Shortening the Term for Early Payoff

In 2023, a couple in California, 10 years into their 30-year mortgage at 4.5%, refinanced to a 15-year term at 5.8% amid rising rates. With $475,000 remaining, they increased payments slightly but shaved 5 years off the loan, saving over $100,000 in interest. Improved credit and home appreciation (up 20%) qualified them easily. Post-refinance, they built equity faster, planning retirement sooner. This illustrates how shortening terms after equity buildup accelerates wealth.

In 2025, with stable rates, refinancing after 10 years remains a powerful tool for optimizing finances—consult a lender to explore options tailored to your situation.

Takeaway On Refinancing a Mortgage that Is Close to Being Paid Off

The question arises: is it worthwhile to refinance a nearly paid-off home mortgage? Prior to initiating the refinancing process, it’s crucial to establish your goals for obtaining a new loan. While the appeal of securing a lower monthly payment or converting equity into cash may be enticing, it doesn’t automatically imply that refinancing is a sensible decision. The key consideration lies in evaluating the expenses associated with securing a new loan and determining whether the potential savings over time will surpass the initial costs incurred.

The bottom line on refinancing after 10 years comes down to the rate that you get, how closing costs are paid, how much closing costs are, and crucially, how long you plan to stay in the home. If you are going to stay there another 10 years, then you can make strong argument to refinance. If you are leaving in two years, you probably are not going to recoup your costs.

References

  • Does a Mortgage Refinance Make Sense? (n.d.). Retrieved from https://www.hsh.com/finance/refinance/does-mortgage-refinance-make-sense.html
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