The 8 finest myths about refinancing your mortgage

The 8 finest myths about refinancing your mortgage


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Refinancing a mortgage — changing an existing mortgage with a brand original one — permits householders to take perfect thing about lower rates or adjust the length of their mortgage timeframe, amongst assorted most likely advantages.

However stubbornly high mortgage rates has positioned put a matter to for refinancing on a downward building in fresh weeks, though soundless increased than the equivalent period a year within the past.

While the professionals of refinancing vary on a case-by-case basis, and could perhaps no longer establish sense for all people, there are some frequent misconceptions about everything from costs to requirements that could perhaps misleadingly steer householders in direction of, or away, from a refinancing.

These are eight of the most traditional myths about mortgage refinancing — and the truths within the aid of them.

Mortgage costs

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While that that you just would possibly presumably additionally undoubtedly keep cash by refinancing your mortgage at a extra favorable charge or mortgage timeframe (essentially, that’s thought to be one of the predominant causes of us attain it), refis attain advance with closing costs like any assorted mortgage. These costs can advance out to as essential as 2-5% percent of the original mortgage predominant, per Bankrate.


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There’s no precise restrict to how repeatedly that that you just would possibly presumably additionally refinance your mortgage, though there are a few requirements connected to personal funds that you just would possibly want to perhaps meet before being ready to practice.


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That you simply would possibly additionally refinance as soon as six months after your outdated mortgage refinance, per American Financing. It’s undoubtedly an option within the event that you just would possibly accumulate any regrets from a outdated refinancing.

“Of route, that that you just would possibly presumably additionally refinance your mortgage as repeatedly as you will have, but many lenders gaze a ‘seasoning’ period, or an period of time in between refinances before they’re blissful approving one other,” Leslie Tayne, founder and head lawyer at Tayne Laws Group in Modern York’s Westchester County, instructed Bankrate.

That being said, it doesn’t essentially mean that that you just would possibly presumably additionally soundless, attributable to a preference of things, including costs and penalties.


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Credit score standing and debt-to-profits ratio are two valuable components that could perhaps additionally settle whether or no longer you accumulate well-liked to refinance or no longer. Profits verification and price determinations also are inclined to be required before refinancing.

Loan denied

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In case your credit score rating wasn’t high sufficient otherwise you didn’t meet equity requirements, it’s most likely that lenders could perhaps accumulate denied your refinancing query. However that doesn’t mean the door is shut perpetually.

You are going to be ready to strive again, per Mountain America Credit score Union. Build up credit score and equity are huge techniques to take your potentialities at getting well-liked.

Loan timeframe

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You don’t repeatedly accumulate to starting up a mortgage timeframe from zero. Even though no longer all lenders provide the option, extra and further are writing customized loans with much less feeble phrases, per American Financing.

Dwelling within the marketplace

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When refinancing a mortgage, you’re no longer adding a brand original lien (the precise relate to your home that serves as collateral for your mortgage). That you simply would possibly additionally be upright swapping out the predominant lien for a brand original one, per Bankrate. As a consequence, refinancing doesn’t accumulate any develop for your title or capacity to sell the home.

Dwelling equity

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That you simply would possibly additionally accumulate heard that you just will have 20% equity to refinance your mortgage. Of route, that’s upright a advice.

To make certain, loans that allow no longer as much as twenty% equity are inclined to require mortgage insurance. Whilst you kill up in that discipline, Mountain America suggests that you just crunch the numbers to make certain that you just’re soundless saving cash overall with a refinance..

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