When not to Refinance a Mortgage

Refinance Rates

caption
Loan	Rate	APR
30 Year Fixed Rate	3.88%	3.38%
15 Year Fixed Rate	4.06%	3.61%
5/1 Adjustable Rate	2.75%	3.37%
* These rates are averages, and might not apply to you.

Get specific advice for your state >>

Mortgage loans

We focus our site on home loan refinancing, but if you're looking for a new mortgage loan, we can help you too.

Evaluate your mortgage loan >> Lowering your mortgage payments Get free mortgage advice

Credit Scores

There is a close link between your credit scores and the refinance mortgage rates you'll be able to secure. We have an extensive guide on fixing up your scores and so much more on our credit scores page!

Don't let your credit score hold you back, you have more options than you know!

Refinance Loans

Start a refinance request >> Refinancing benefits Home loan refinance rates Our refinance calculators

We are the #1 independent resource for mortgage refinancing on the web; and our partners have the best mortgage refinance rates available on the web.

When faced with the opportunity to refinance a mortgage, there are clearly circumstances when this would be a disadvantage to the home owner. Obviously, if the term of the mortgage is set to expire, the home owner must refinance in the sense that a new contract is required in order to continue. The financial institute will require an agreement to be in place, and it usually dictates the terms and payment structure. But when the home owner is contemplating a refinance, here are the times when not to refinance a mortgage.

First, even if you are desperate and need for funds for an emergency, and your mortgage looks like your only hope, getting out of an existing mortgage that is not set to expire is going to be costly. Most private lenders write a three month penalty into the contract. This means that if you refinance before the term is due, you are required to pay the lender three extra interest payments as part of the final "payout" figure. Depending on how much the monthly payment is versus the equity in the home, this could deter many people from refinancing before the agreement expires.

Second, if you have little equity in your home, the lender may require that you purchase PMI (private mortgage insurance). Typically, if you have less than twenty percent equity in the home, you are going to be responsible for PMI payments. This is going to increase your monthly expenses and thus, may not fit in your budget.

Third, if there is little equity in the home, trying to pay out one mortgage lender to do business with another may cost more than you expected. Remember that the new lender will most likely add all the costs to the new mortgage so you will actually have a higher mortgage than anticipated.

Fourth, poor credit may prevent many from being able to do a mortgage refinance. Even though the current mortgage is in good standing, the lender may feel that the income is too low or that other expenses are just too high to take a chance. Therefore, the home owner may not be eligible to refinance.

Fifth, if your home is mortgaged for more than it is worth, you will undoubtedly encounter a difficult time trying to find someone to refinance your mortgage. Much like the situation where foreclosure exists, there is only a small number of lenders available to take on such risky investments. And definitely, a bank is not even going to waste its time talking to you. This is not the time to refinance a mortgage.

Sixth, if you are in a situation where you have been with same lender for a long time, it may seem like a good deal to refinance with someone else, but in reality you may be making a mortgage payment for a long time to come if you cannot negotiate a low mortgage amortization period.

Finally, if you are going to refinance a mortgage, you need to look at the "real interest rate". That is all the fees associated with the new mortgage combined with the interest rate. What may seem like a low interest rate may turn out to be much higher.

Refinance Mortgages

Mortgage Refinance Loans

Compare Refinance Rates
& Start Saving Today!

Refinance Rates

Mortgage loans

Credit Scores

Refinance Loans