The best time to refinance a mortgage is when interest rates have dropped significantly below the rate on your current loan, allowing you to save money on monthly payments and interest over the life of the loan. Refinancing also makes sense when your credit score has improved enough to qualify for a lower interest rate, or when you want to change the terms of your mortgage to better fit your financial goals, such as switching from an adjustable-rate to a fixed-rate mortgage or shortening the loan term. Key reasons to refinance include:

• Securing a lower interest rate to reduce monthly payments and overall interest costs.
• Changing mortgage terms to extend or shorten repayment time.
• Borrowing against home equity for cash to cover expenses or renovations.
• Consolidating debt under a lower rate.

Important considerations before refinancing:

• Calculate the break-even point, i.e., how long it takes to recoup closing costs through monthly savings; refinancing is beneficial if you plan to stay in the home beyond this point.
• Ensure your credit score supports a better rate.
• Avoid refinancing shortly after purchasing unless rates have dropped substantially.

Typically, a rate drop of around 0.5% to 1% below your current rate is a common benchmark for considering refinancing, but the exact benefit depends on individual financial situations and goals.