How to Refinance Your Mortgage — When It Makes Sense, Costs, and Process in 2026
With the 30-year fixed mortgage rate declining to 5.98% in late February 2026 — down from 6.22% just two months earlier — millions of homeowners are wondering whether now is the right time to refinance. The Federal Reserve's rate-cutting cycle, which has brought the federal funds rate from 4.33% in August 2025 to 3.64% by January 2026, has created a narrowing window of opportunity for borrowers locked into higher rates from 2023 and 2024. Refinancing replaces your current mortgage with a new one, ideally at a lower rate or with better terms. But it is not free — closing costs typically run 2–5% of the loan amount, and you reset the clock on your payoff timeline. This guide explains when refinancing makes financial sense, walks through the process step by step, and helps you calculate whether the savings justify the costs.