You've chunked the balance down, rates have moved, and now a refinance looks attractive. Before you apply, understand what a refi actually does to the work you've already done.
A refinance starts a brand new amortization schedule. That's the piece people miss. The reason your early payments barely touch principal is front-loaded interest, and a refi puts you back at the front. Take a loan you're eight years into and refinance it into a fresh 30, and you've handed back most of the amortization progress in exchange for the lower rate. Sometimes that still wins on total interest. Often it doesn't, and nobody runs the number because the payment went down.
Run it two ways. Refinance into a shorter term, 20 or 15 years, so the new schedule roughly matches where you already were. Then compare the total interest remaining on your current loan against the total interest on the new one, including closing costs. If you're rolling the costs into the balance, add them to the balance before you compare.
There's also a recast, which fewer people know about. If you've made a large chunk against principal, most servicers will re-amortize the existing loan over the remaining term for a small fee. Same rate, same payoff date, lower required payment. That's the right move when your current rate is already good and you just want the payment to reflect the balance. I went through it in what a chunk changes and what it doesn't.
The timing mistake is the expensive one. Underwriters look at your debt-to-income ratio, and a drawn-down line of credit counts against you. If you've got $40,000 sitting on the HELOC because you just chunked, that payment goes into the DTI calculation and it can push you out of qualifying entirely. Pay the line down before you apply, not after. And be aware that a first-lien HELOC and a conventional refinance are two different products with two different underwriting paths, so don't assume the loan officer knows which one you're describing.
Once the new loan closes, the chunking math resets around the new balance and the new rate. Rerun it before your next chunk instead of assuming the old schedule still applies.