Refinancing your mortgage before the rate adjusts can protect you from rising payments tied to an adjustable-rate mortgage (ARM). If your ARM reset is within the next year and interest rates are climbing, switching to a fixed-rate loan can lock in stability, save money long-term, and ease budgeting stress. Timing is key—refinancing 6–12 months before the adjustment gives you the best shot at avoiding costly surprises.
Why ARMs Seem Great—Until They’re Not
ARMs usually lure you in with a low rate for the first few years. Super tempting. But once that honeymoon phase is over, that rate starts adjusting—usually upwards. And yeah, that low 3% might turn into 6.5% before you can say “fixed-rate.” Your payment is predictable right now, sure. But once that rate adjusts? All bets are off.
Here’s what you’re really looking at with an ARM:
- Lower monthly payments (at first)
- A rate that’s locked only for a few years
- Instability the longer you sit on it
- A big jump in payments once the rate adjusts
Refinancing your mortgage before the rate adjusts means flipping to a fixed-rate loan instead. One that doesn’t change every six months based on the market. One that gives you stability. Consistency. Sleep at night type of stuff.
When’s the Best Time to Refinance Your Mortgage Before the Rate Adjusts?
You don’t wait until the rate actually adjusts. That’s like waiting until your car breaks down on the freeway to buy insurance. Do it before the adjustment is scheduled. Ideally 6-12 months before that date hits.
Watching interest rates? Here’s what to check before jumping:
- What’s your current rate vs. today’s average fixed? If fixed is lower or close—consider moving now.
- What’s your credit score? Good credit = better refinance terms.
- Can you afford the closing costs? (Usually 2–5% of your principal)
- How long will you stay in the home? If it’s long-term, refinancing usually pencils out.
This isn’t complicated math—it’s just being real about what’s ahead. If you’re within a year of your ARM adjusting and rates aren’t terrible? It’s worth running the refi numbers right now.
What Happens If You Don’t Refinance On Time?
Let me paint this quick. You’ve got a 5/1 ARM. That means for 5 years, it’s fixed. Then it adjusts once a year. At year 6, boom—your lender uses the market index + their margin to figure your new rate. Could go way up.
If rates are higher—and spoiler alert: they probably will be—your payment climbs. And if you’re stretching budgets already, that adjustment can hit like a truck.
Seen it too many times. Families caught between selling their home or bleeding cash each month just to keep up. If you refinance your mortgage before the rate adjusts, you dodge that whole mess.
But Won’t Refinancing Cost Me a Lot?
Sure, it’s not free. But skipping a refi could cost more. Like being frugal by not fixing a roof leak until you’re mopping up the living room.
Here’s how the costs usually stack up:
| Cost Type | Typical Amount |
|---|---|
| Application/Loan Origination Fee | $1,000–$2,500 |
| Appraisal Fee | $300–$600 |
| Title & Escrow Fees | $500–$1,500 |
| Recording & Taxes | $200–$800 |
| Total Estimated Closing Costs | 2–5% of loan amount |
Still, you might break even in 1–3 years. After that? It’s all upside—lower payments or more stability.
Run your numbers. If your new lower payment can save $300/month and closing costs are $4,000—you break even by month 14. Worth it.
How Your Credit Score Affects Your Refi Rates
If you’re sitting at a 650 credit score, you might get a fixed-rate refi around 7.5% right now. But if you’re at a clean 750+, you could score a 6.5% rate. That half or full percentage point matters big-time over 30 years.
Before refinancing your mortgage before the rate adjusts, I always tell people to check their credit health:
- Pay down high-balance cards
- Get errors off your credit report
- Don’t open new credit lines 3–6 months before refi
Dial your credit in = better rate = long-term savings.
Fixed Rate vs. ARM: What You’re Really Trading
A lot of folks forget that refinancing into a fixed-rate loan isn’t only about the interest—it’s about certainty.
It’s knowing your payment next month, next year, and 10 years from now will stay the same (assuming taxes and insurance don’t spike).
What fixed-rate refi gives you:
- ✅ Predictable monthly payment
- ✅ Easier budgeting year to year
- ✅ Protection from rate hikes
- ✅ Peace of mind
Now, if you only plan on staying in the house for 1–2 more years, a refinance might not make sense. But if you’re in this for the long haul, locking in now could be the clutch move.
And remember, we’ve covered timing a refinance over on the reAlpha blog too.
How to Know If Refinancing Is Right for You
No theory here. If you’re refinancing your mortgage before the rate adjusts, use real-life checks:
- How long until your rate adjusts? If it’s under 12 months—look at options now.
- Can you get a fixed-rate lower than your projected ARM rate? Compare lenders.
- Will you stay in the house 3+ years? Long enough to break even on refi costs.
- Is your credit solid? Better score = stronger rates.
Still not sure? We’ve got a post on the reAlpha blog that helps you run the math clean.
FAQs:
Is it worth refinancing my ARM before the adjustment date?
Usually, yes—especially if you plan to stay in the home long-term. It can lock in a predictable rate before possible increases.
How early can I refinance an ARM?
You can technically refinance any time, but doing it 6–12 months before your adjustment lets you avoid last-minute scrambles and higher rates.
Conclusion:
Refinancing your mortgage before the rate adjusts is more than a financial tactic—it’s a proactive step toward long-term stability. ARMs can start out attractive, but once they reset, rising payments can disrupt your budget. By refinancing 6–12 months before the adjustment, you gain predictable payments, shield yourself from rate hikes, and avoid last-minute stress. If you plan to stay in your home and want peace of mind, now may be the right time to make the switch.