When Is It Worth Refinancing Your Mortgage in Tennessee? | Home Loan Locals
Start with the rate difference
A general rule of thumb is that refinancing starts to make sense if your new rate is at least half a percent lower than your current one. That’s not a magic number, but it’s usually enough to cover the costs of the new loan within a reasonable time frame.
Let’s say you bought your home in 2022 with a rate around 7 percent, and you can now lock in 6 percent. On a $400,000 loan, that difference could drop your monthly payment by roughly $250. If closing costs are around $3,500, you’d make that back in about 14 months. After that, the savings are yours to keep.
Consider how long you’ll stay put
The time you expect to stay in your home is one of the biggest factors in deciding whether to refinance. If you plan to sell within a year or two, the math usually doesn’t work out. But if you see yourself staying put for several more years, even a modest rate drop can add up to thousands of dollars saved.
For many Middle Tennessee homeowners, this comes into play when job situations change or kids are still in local schools. If you expect to stay in the same area for at least a few years, it’s usually worth running the numbers.
Know your break-even point
The “break-even” point is how long it takes for the savings from your lower rate to cover the costs of refinancing. It’s a simple but often overlooked piece of the puzzle. A good local lender will help you calculate that before you commit.
For example, if your refinance saves you $200 a month and costs $3,000 in fees, your break-even point is about 15 months. Stay in your home longer than that, and you come out ahead.
Think beyond rate alone
Even if the rate savings seem small, refinancing can still make sense for other reasons. Some borrowers shorten their term from 30 to 20 years to build equity faster. Others roll high-interest debt into a lower-rate mortgage to clean up monthly cash flow. And sometimes, it’s about removing mortgage insurance once home values have climbed.
In Middle Tennessee, home values have risen steadily for the past few years. That means many homeowners now have more equity than they realize. If you bought with less than 20 percent down, refinancing might eliminate PMI entirely, which can save an extra hundred or two every month.
Don’t forget timing and credit
Rates move daily, and credit scores still play a big role in what you qualify for. Even small differences in your score can impact your pricing, so it’s worth checking before you start.
That’s where working with the right local lender makes a difference. Home Loan Locals connects you with one or two trusted Tennessee lenders who know the market, understand local appraisals and taxes, and can give you clear, personalized guidance on whether a refinance actually benefits you.
The bottom line
A refinance isn’t just about chasing a lower number. It’s about improving your financial picture and making your home loan work better for you.
If you’re a Tennessee homeowner wondering whether now’s the right time, visit HomeLoanLocals.com. It’s a free, no-pressure service that connects you with one or two trusted local lenders who know the Tennessee market inside and out.
Unlike the big national sites that sell your information to a dozen companies—leaving you flooded with calls, texts, and emails—Home Loan Locals keeps it personal and private. You’ll hear from only one or two experienced loan officers who can walk you through your options clearly and honestly.
That way, you get real local advice without the spam and without the hassle.