Refinancing replaces your current home loan with one that offers new terms and has long been a tool for improving household finances, and it’s a trend on the rise.
According to a LendingTree study, American households had $34.5 trillion in home equity as of the first quarter of 2025. That’s $600 billion more than the results from Q1 2024, meaning more homeowners could unlock home equity loans to pay down high-interest credit cards or make home improvements.
The data also reveals that many are choosing to refinance even without a drastic drop in rates, suggesting that homeowners are seeking flexibility, debt relief or faster equity build-up rather than simply chasing lower monthly payments.
Related: 5 Things You May Not Know About Refinancing
Lenders Loosen Credit Requirements
A key reason for this renewed interest is that lenders are making it easier to qualify for a refinance. Earlier in the year, refinance application rejections were high — nearly 42% of applicants were turned away in February 2025. But by June, that figure had dropped to just 15%. This dramatic change means more borrowers, including many Veterans and active-duty servicemembers, can now secure refinancing terms that fit their needs. Improved credit access allows families to explore not only lower monthly payments but also cash-out refinancing, shorter loan terms, and fixed-rate options to increase long-term stability.
Although mortgage rates remain higher than their historic lows, recent trends show signs of decline. As of mid-summer 2025, the average 30-year fixed rate hovers in the mid-6% range, with 15-year loans near 6%. Even so, there are encouraging signs. In July, rates dipped to a 10-month low, offering a potential opportunity for homeowners holding mortgages above 7% to capture real savings. Industry forecasts suggest continued downward movement into late 2025, with the 30-year average expected to fall into the 5.7% to 6.4% range depending on the source.
“With mortgage rates fluctuating, it’s important for our Members to keep a close eye on the market,” says Rob Greenbaum, Chief Marketing Officer of AAFMAA Mortgage Services LLC (AMS). “Even a small drop could present a significant opportunity to improve your financial position. Our team is here to help you evaluate your options — and with our no-fee refinance offer, now is a great time to see if refinancing makes sense for you.”
Related: Cash-Out Refinance vs HELOC – Which Is Right for Me?
Doing What’s Right for You
Still, refinancing is not always the right move for every homeowner. If your current mortgage rate is under 7%, the benefits of refinancing may be marginal, especially after factoring in closing costs and fees. But refinancing becomes a much more attractive option if your rate is significantly above market averages, or if you have goals like accessing equity, consolidating debt, or restructuring your loan term. For many military families navigating frequent relocations or preparing for civilian life transitions, a strategic refinance can bring peace of mind and lasting financial benefits.
One option gaining popularity among savvy borrowers is the practice of paying discount points to lower the interest rate. Known as “buying down the rate,” this strategy involves paying an upfront fee to the lender in exchange for a lower interest rate on your new mortgage. Each discount point typically costs one percent of the total loan amount and may reduce your rate by about a quarter of a percent, although the actual value can vary.
For example, refinancing a $300,000 mortgage and paying one point ($3,000) might reduce your interest rate from 6.75% to 6.5%. Paying two points, or $6,000, could bring it down further to 6.25%. Please note the actual annual percentage rate (APR), the total cost of what you are paying in interest and fees, may be higher. The value of this strategy lies in the long-term savings it provides. A lower rate means lower monthly payments and significantly reduced interest costs over the life of the loan. Please note that refinancing your mortgage may result in higher finance charges over the life of the loan.
Related: What are Points and Should You Pay Them to Lower Your Interest Rate?
When It Makes Sense to Buy Down the Rate
Paying points makes the most financial sense if you plan to stay in your home or hold onto the mortgage for several years. That’s because the upfront cost is offset gradually by the monthly savings. A simple way to assess the value is to calculate your break-even point — how many months it will take to recoup the cost of the points through reduced payments. If you pay $3,000 in points and save $125 per month, you’ll break even in two years. From that point forward, the savings go straight into your pocket.
This approach can be particularly appealing to military families planning to retire in their current home, or those with predictable duty station stability for the next several years. Even if you’re unsure how long you’ll keep the house, substantial equity and the option to roll the points into the loan balance may still make the decision worthwhile. It’s important to discuss these variables with a knowledgeable mortgage advisor, especially one familiar with military-specific lending tools.
Beyond interest rate savings, refinancing offers other strategic advantages. It allows homeowners to restructure their loan terms, such as moving from a 30-year to a 15-year loan to build equity faster, or the opposite — extending a term to reduce monthly financial pressure. For those with significant home equity, a cash-out refinance can fund necessary upgrades or help pay down high-interest consumer debt. For military members with existing VA Home Loans, a VA IRRRL, also known as a streamlined refinance, can lower rates with less documentation and faster processing.
Related: Saving $250 Month with a VA IRRRL Streamlined Refinance
Understanding Your Situation
Determining whether refinancing is right for you involves more than comparing rates. Consider your current loan balance, the amount of time you plan to remain in your home, your equity position, and your financial goals for the next five to ten years. AMS encourages our members to assess not only whether they can refinance — but whether they should, given the full financial picture. As a trusted partner for the military community, we’re here to help you examine your options thoroughly and transparently.
If you’re thinking about refinancing, now is the time to start the conversation. Rate trends are moving in a promising direction, lenders are easing access to credit, and strategies like paying points may help you secure a better long-term position even in a mid-6% interest rate market. Every financial journey is unique, but the opportunity to improve your mortgage structure is within reach — especially with the right guidance.
We’re Here to Help
Whether you’re thinking about buying, ready to start home-shopping in earnest, or considering a refinance, an AMS Military Mortgage Advisor will be happy to provide you with an honest and fair comparison of your mortgage options, including a wide range of affordable mortgages designed to meet your needs.
Ensuring Armed Forces Mutual Members obtain the best mortgage possible is our mission. Get your free mortgage assessment today or give us a call at 844-422-3622!