How to Refinance Your Mortgage in a Rising Rate Environment

With interest rates on the rise, refinancing a mortgage may seem counterintuitive. However, for some homeowners, refinancing still makes good financial sense even as rates increase. The key is acting strategically and quickly to lock in a lower rate before they climb higher. 

Here tips for smartly refinancing your mortgage in a rising rate environment.

Act Sooner Rather Than Later

The longer you wait, the more you risk rates increasing further. Monitor rate trends and projections to determine if rates are expected to rise significantly in coming months.

If they are, refinance as soon as possible to lock in the best rate you can currently qualify for. You may not get the rock-bottom rate you’d hope for, but you’ll still save versus doing nothing.

Consider Shortening Your Term

When rates rise, one of the best ways to reduce interest costs is shortening your loan term.

Switching from a 30-year to 20- or 15-year mortgage means paying the loan off sooner and paying less interest overall compared to a longer term. Your payments will be higher, but you’ll build equity faster.

Look at Alternative Lenders 

Don’t assume a big bank is your only option. Check rates with credit unions, online lenders, and mortgage bankers.

Non-traditional lenders are often able to provide more competitive rates. They may also charge lower fees. Do your research to find a reputable company that offers the best overall deal.



Refinancing in a rising rate environment requires diligent research and quick action. But for many homeowners, it may still provide an opportunity to strengthen your financial position by securing a lower mortgage rate before rates climb higher.

By following the tips in this article, you can make a strategic refinance decision that benefits you both now and for years to come.