When Is the Right Time to Refinance Your Mortgage?

By Michael Martin, Martin Mortgage Group

With Legal Insights from McCae Edwards, Real Estate Attorney – Midtown Law

Refinancing your mortgage can be a smart financial decision, but it’s essential to consider the right timing. Whether you're a homeowner aiming to reduce monthly payments or a real estate agent guiding your clients, understanding when and why to refinance is crucial. Below, Michael Martin covers the financial side, while I’ll highlight key legal considerations from an attorney's perspective.

Reasons to Refinance

1. Take Advantage of Lower Interest Rates

One of the most common reasons to refinance is when interest rates drop. However, it’s not just about securing a lower rate—it’s about performing the math. If you can recover the upfront cost of refinancing within 12 months or less, it’s usually a solid option. Refinancing costs typically range from 2% to 5% of the loan amount, but many homeowners can roll those costs into the loan or even buy down the rate further for added long-term savings.

2. Consolidate High-Interest Debt

Using your home equity to consolidate high-interest debt, such as credit card balances, can significantly improve your monthly cash flow. With interest rates on personal loans and credit cards often in the double digits, refinancing can make a huge difference in reducing your financial burden.

3. Restructure After a Major Life Change

Life events like divorce can also necessitate refinancing. Whether you're removing a spouse from the mortgage or accessing equity to divide assets, refinancing offers a way to reset your finances.

4. Fund New Opportunities

Some homeowners use refinancing to unlock opportunities such as purchasing a second home, investment property, or even funding a new business venture. With the right strategy, refinancing can leverage your home’s equity without relying on higher-interest loans or more restrictive options.

5. Move from an ARM to a Fixed Rate

If you're currently in an adjustable-rate mortgage (ARM), refinancing into a fixed-rate loan before your rate adjusts can offer peace of mind and more predictable monthly payments. In today’s uncertain rate environment, this could be a smart financial move.

6. Eliminate PMI

If your home’s value has increased enough, refinancing could help eliminate private mortgage insurance (PMI), adding real savings to your bottom line.

What Your Attorney Wants You to Know About Refinancing

While Michael’s insights cover the financial side, refinancing is also a legal process—especially in attorney closing states like North Carolina and South Carolina, where state law mandates a licensed attorney oversee all residential closings, including refinances.

Here’s what you need to know from a legal perspective:

1. A Refinance Is a Real Estate Closing

Refinancing your home loan may feel less significant than a home purchase, but it still involves a formal closing process. This includes:

• Title search

• Legal document preparation

• Loan signing and notarization

• Coordination of payoffs and escrows

• Recording the new deed of trust (mortgage)

As your closing attorney, we handle each component to ensure the transaction is legally valid, enforceable, and compliant with state law.

2. We Still Have to Clear Title

Even if you've owned your home for years, a clean title is essential. Our team conducts a thorough search to ensure there are no outstanding liens, unreleased mortgages, or unresolved judgments. We also work with your lender to make sure your payoff is calculated correctly and timed for closing.

3. We Review the Numbers

Your closing attorney reviews the final settlement statement (the Closing Disclosure or ALTA) to ensure that all fees, escrows, and payoffs are properly accounted for. We’re there to catch errors, discrepancies, or potential overcharges before documents are signed and recorded.

4. Know About the Right of Rescission

For most primary residence refinances, federal law requires a three-day right of rescission. This gives you three business days after closing to change your mind. Unless you waive this right, during this period no funds are disbursed, and your old loan isn’t paid off until the rescission period expires. Be sure to plan accordingly, especially if your refinance is timed to pay off debts or remove a borrower from the mortgage.

5. The Market Is Moving

As of Spring 2025, we are seeing increased refinance activity in both North Carolina and South Carolina. Many homeowners who refinanced or purchased during the higher-rate environment of 2022–2023 now have the chance to restructure their loans under better terms. We're also seeing an uptick in refinances tied to life events like divorce or investment planning, as home values continue to rise across the Carolinas.

Final Thoughts

Refinancing is more than just a financial decision—it’s a process that requires careful legal consideration. Whether you’re refinancing to lower your rate, tapping into home equity, or restructuring after a life event, it’s essential to approach the process with a clear understanding of both the financial and legal steps involved.

At Midtown Law, we work closely with loan officers like Michael Martin to ensure your refinance is smooth, accurate, and fully compliant. Have questions about the legal side of refinancing? Contact us today.