Refinance applications are in free fall. Rates dipped to 5.98% in late February 2026, refi demand spiked briefly, then rates climbed back to 6.38% by late March and the wave died. Most California homeowners locked in under 4% during the pandemic aren't touching their mortgages.
The question isn't "should I refi?" It's "should I refi to do something specific?"
The Simple Math
You've got a $500,000 mortgage at 3.5% from 2020. Payment: $2,243/month.
Refinance today at 6.375%? Payment jumps to $3,120. That's $877 more per month, $10,524 per year. Plus $5,000-$8,000 in closing costs. You'd need a very good reason.
Cash-Out Refi: The Old Play Is Dead
Two years ago, you could refi from $500,000 at 3.5% into $550,000 at 3.8%, pull out $50,000, and barely feel it.
Today you'd refi that $550,000 at 6.375%. Payment jumps from $2,243 to $3,407. You just paid $5,000-$8,000 in closing costs to borrow $50,000 at 6.375%.
Cash-out refis only work now if you're pulling serious equity (25%+) for something that pays for itself -- a renovation that increases value, or debt consolidation where the refi rate is lower than what you're paying on credit cards.
Most people skip cash-out refis right now.
Rate-and-Term Refi: Almost Never Worth It
Refinancing at a higher rate just to change your loan terms? The payment would more than double on a 15-year. Skip it.
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The one exception: You've got an ARM about to adjust. If your ARM sits at 5.5% today but jumps to 7% in year 8, locking in 6.375% fixed is a genuine protection move.
When Refi Actually Works in 2026
The plays that do work are narrow:
ARM adjusting soon. If your 7/1 ARM is about to jump from 4.5% to 7%+, locking 6.375% fixed saves you money after the adjustment.
Debt consolidation at better rates. Paying 8-12% on credit cards? A cash-out refi at 6.375% could save $1,050/year on $30,000 in card debt. The $7,000 closing cost pays for itself in 7 years. But you've got to stop using those cards.
Removing PMI. If you put 5-10% down originally and now have 20%+ equity, dropping PMI could save $200-$300/month. Only works if the higher rate doesn't wipe out the PMI savings. Run the exact numbers.
The California Context
In high-value California markets, refi math gets harder. A $500,000+ refi costs $7,000-$10,000 in closing costs alone. Average mortgages in San Francisco, San Jose, and Los Angeles run $600,000-$800,000+. A 2-3% rate increase is a $2,000-$3,000 monthly hit.
Bottom line: If someone pitches a refinance as a "good idea," ask them why. If they can't point to a dollar amount or a concrete problem it solves, the refi isn't for you.
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What to Do Instead
- Rate under 4%? Keep it. Don't refi unless it's an ARM adjusting.
- Need cash? Look at a HELOC or home equity loan -- lower closing costs, more flexible.
- Want to improve your mortgage? Wait. Rates might drop in 2027-2028. Get A Quote when they do.
- Bad loan terms? Talk to a broker about modification, not a full refi at current rates.
Refi demand is dropping because most people already know: higher rates killed the appeal. The smart move is to make peace with your current mortgage and focus on other goals.