The answer is both yes and no. Let us break it down for you.
When you refinance your mortgage, you typically won’t have a payment due for one or two months. In that sense, it might feel like you’re skipping a payment. However, it’s not quite that simple..
The “skipped” payment isn’t free. Instead, the interest that accrues on your new loan between the refinance funding date and your first payment is added to your closing costs as pro-rated interest. This cost is often rolled into your mortgage balance unless you choose to pay it upfront in cash. In other words, you’re still paying for that time—you’re just paying differently.
As the saying goes, “There’s no such thing as a free lunch.” The same applies to refinancing.
In addition to skipping a payment or two when you refinance, if you’re paying off a loan that has an an escrow account and switching lenders, the balance of that account will be refunded within 30–60 days of closing. If the new loan has an escrow account as well, the funds to set it up will be included in your closing costs. That means you won’t need to send the refund to your new mortgage company—it’s yours to keep.
For these reasons, many borrowers choose to refinance in December. The break in payments and escrow refunds can feel like a welcome bonus during or after the holiday season.
I would never encourage someone to refinance a home for these reasons alone, as each transaction must make financial sense. Think of these perks as extra benefits rather than primary motivations.
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