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If you signed your mortgage in recent years, you may be pretty unhappy with your monthly payments. Following a period of record lows, mortgage rates began climbing in 2022 and haven’t really declined since.

Sure, there have been some ups and downs. In fact, in September and early October, mortgage rates dipped toward the 6% mark temporarily.

But as of this writing, they’re closer to the 7% mark. And that’s not exactly a great deal.

What makes the situation frustrating is that the Fed has already lowered its benchmark interest rate twice this year — first in mid-September and again in early November. A lot of people were expecting mortgage rates to fall in the wake of those rate cuts, but clearly, that hasn’t happened yet.

That’s why you may want to wait to refinance your mortgage until 2025, even if you’re not having the easiest time keeping up with your monthly housing payments today. Sitting tight for a few more months could lead to a much better deal.

Waiting to refinance could pay off

Perhaps you’re able to lock in a lower interest rate on a mortgage today than what you’re currently paying. But if you hold off a bit longer, you may find that you can get a much more competitive rate on a refinance.

The Fed is expected to continue cutting interest rates to reverse the numerous hikes it made in response to soaring inflation. So if you sit back and wait for those additional rate cuts to happen, you may benefit financially.

Now, you might be thinking, “But clearly, mortgage rates haven’t reacted to the Fed’s actions yet. What if they end up stuck where they are?”

That’s a valid concern. But it’s also unlikely.

In time, mortgage rates should catch up to the Fed’s rate cuts to some degree. This doesn’t mean we’re going to see the average rate on a 30-year loan go from almost 7% to 5% over the next three months. But during the first half of 2025, we may see mortgage rates fall to under 6%. If you can hold off on applying to refinance a bit longer, you may come out a winner.

Set yourself up for success now

Since mortgage rates might reach a more favorable level in 2025, it’s a good idea to wait to refinance. But there are also steps you can take to set yourself up for a competitive rate once the time is right to apply.

First, boost your credit score. You can do so by paying bills on time, reducing credit card balances, and reviewing your credit report for errors.

Next, try shedding non-credit-card debt. If you have a personal loan you’ve been paying off over time, see if it’s possible to accelerate some payments and get rid of it. The less debt you have relative to your income, the more it helps you refinance at a great rate.

Finally, start shopping around for a lender to do your refinance even if you’re not quite ready to apply. If you can narrow down your choices, you’ll be in a great position to pounce once rates finally take a fall. Click here for a list of the best mortgage refinance lenders to get started.

Refinancing your mortgage could make your monthly payments cheaper, so it’s easy to see why you’d want to put a new home loan in place as soon as possible. But waiting a few more months could mean locking in a lower interest rate — and enjoying more financial relief.

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