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10 Best and Worst States for Refinancing Your Mortgage After a Big Rate Cut

October 17, 2025

3 min Read

Written by Daria Uhlig

Edited by Levi Leidy

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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.

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.