In response to the economic disruption caused by COVID-19, the Federal Reserve has taken unprecedented action. While the rate cut and the Fed’s other recent actions are aimed at reducing the cost of borrowing for businesses affected by revenue losses during the pandemic, they also provide a potential silver lining for homeowners in the form of historically low mortgage rates.1

Here are three ways refinancing a mortgage could have an immediate impact on your financial situation.

1. Lower payments can relieve budget pressure

In times of economic uncertainty, increasing your cash on hand can provide a sense of security. Refinancing your mortgage at a lower rate allows you to reduce the amount you spend on your mortgage every month, freeing up that cash for other things. For example, you might put those funds toward building up your emergency savings. The difference between the rate on your existing mortgage and the rate on your refinanced mortgage will dictate how much lower your monthly payment will be.

2. Shorter loans mean faster payoffs

Refinancing into a loan with a shorter term can help in situations where borrowers want to get more aggressive about paying down debt. For example, if you want to retire in the next decade or so but still have 22 years left on a 30-year mortgage, refinancing to a 15-year loan might make sense. If the new rate is substantially lower than the old one, the monthly payment on a refinanced 15-year loan could be comparable to that of your current loan. While your immediate cash flow might not improve, you would end up paying your loan off sooner.

3. An opportunity to use your home equity

Refinancing also provides an opportunity to unlock some of the equity in your house. A cash-out refinance involves taking out a new loan that exceeds the amount of principal left on your current loan, generally up to 80% of the home’s current value. You get the difference in cash, to do with as you please. However, it’s generally wise to have a specific plan for that cash, since you will have to pay it back with interest. For example, you might want to consolidate high-interest credit card debt or renovate your home.

It’s important to have a plan

While there are many good reasons to refinance a mortgage, those reasons don’t necessarily mean it’s the right move in your current financial situation. A trusted financial advisor can be a huge help when it comes to making the right decision at the right time.

Reach out to us if you think a mortgage refinance might benefit your financial situation. We offer a full suite of digital tools customers can access from anywhere, including an online application with instant pre-approval, as well as online document signing. Whether refinancing is right for you or not, we can talk through your situation, understand your needs, and work with you to develop a plan that fits your unique circumstances.


1 Reuters, “What Do the Fed’s Latest Moves Mean for U.S. Consumers?” March 15, 2020.

This article is for informational purposes only and is not intended as an offer or solicitation for the sale of any financial product or service. It is not designed or intended to provide financial, tax, legal, investment, accounting, or other professional advice since such advice always requires consideration of individual circumstances. Please consult with the professionals of your choice to discuss your situation.


Share this page

If you are interested in sending this page to a friend or relative, please enter the following:

* Indicates required fields
+ Add another

No personal information (including e-mail addresses) about you or your friend will be collected from this e-mail notification feature offered by M&T Bank.

Please Note:

By clicking "ok" below, you will leave and enter a Third-Party Website.

Please note that:

  • The Third-Party Website is governed by a different set of terms and conditions and privacy policy than and you should review those terms, conditions and privacy policy prior to reviewing the content of the Third-Party Website
  • M&T is providing a link to the Third-Party Website as a convenience and does not necessarily control the content of, or endorse, the Third-Party Website, it's owner/operator or any information, products or services that are made available on or through it
  • M&T makes no representations or warranties regarding the information, products or services provided through the Third-Party Website

Such Third-Party Website's owner/operator may be regulated by governmental entities and laws that are different than those that regulate M&T.