Homeowners waiting until mortgage rates are lower to refinance their mortgage loans have had good news lately, as rates have fallen coinciding the September federal funds rate reduction. But according to the Neighbors Bank 2025 Mortgage Refinance Study, a big rate cut would benefit some states’ homeowners more than others.
As part of its study, Neighbors Bank did a state-by-state analysis of the average time it would take for homeowners to break even after reducing their mortgage rates by 0.50% with a refinance loan. Due to variables such as average loan size, property taxes, insurance premiums and closing costs, just 10 states’ homeowners would break even within three years — and even then, homeowners in four of the top 10 states would be less than $100 in the black.
Here are the 10 best and 10 worst states for refinancing your mortgage for a 0.50% rate cut, per the Neighbors Bank study. The analysis assumed a 30-year fixed rate of 6.8%, an average loan amount of $386,339 and $5,458 in closing costs for the refinance loan.
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10 Best States for Refinancing Your Mortgage
Homeowners in these states would be the quickest to break even, and they’d have the highest savings after three years.
New Hampshire
- Years to break even: 2.8
- Three-year savings: $316
Colorado
- Years to break even: 2.8
- Three-year savings: $295
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California
- Years to break even: 2.8
- Three-year savings: $405
Washington
- Years to break even: 2.9
- Three-year savings: $223
District of Columbia
- Years to break even: 2.9
- Three-year savings: $231
Hawaii
- Years to break even: 2.9
- Three-year savings: $200
Missouri
- Years to break even: 2.9
- Three-year savings: $72
Montana
- Years to break even: 3
- Three-year savings: $52
Utah
- Years to break even: 3
- Three-year savings: $54
Alaska
- Years to break even: 3
- Three-year savings: $71
After five years, California, Washington, D.C., and Hawaii rank No. 1, No. 2 and No. 3 for the amount of money saved, due to the outsized effect rate cuts have on markets with the highest housing costs.
10 Worst States for Refinancing Your Mortgage
These states have the longest break-even times, and they’re among the states where homeowners are deepest in the hole after three years.
Nebraska
- Years to break even: 3.5
- Three-year savings: -$603
Tennessee
- Years to break even: 3.6
- Three-year savings: -$812
Mississippi
- Years to break even: 3.6
- Three-year savings: -$558
Ohio
- Years to break even: 3.6
- Three-year savings: -$700
New Jersey
- Years to break even: 3.7
- Three-year savings: -$1,299
Michigan
- Years to break even: 3.9
- Three-year savings: -$749
West Virginia
- Years to break even: 4.1
- Three-year savings: -$861
Illinois
- Years to break even: 4.1
- Three-year savings: -$1,449
Louisiana
- Years to break even: 4.1
- Three-year savings: -$1,195
Connecticut
- Years to break even: 4.1
- Three-year savings: -$1,971
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This article originally appeared on GOBankingRates.com: 10 Best and Worst States for Refinancing Your Mortgage After a Big Rate Cut
