Pros And Cons Of Refinancing

by D. Carlino from Texas, USA

Ask Kate about the pros and cons of refinancing my mortgage: Hi Kate, My home loan is with a major bank. I owe $126,000 at 6%. But my house is only worth $118,000. Today I can refi, per my mortgage company, at 4.75% at a total closing cost of about $5200, to be rolled into the refinance. This will bring my upside-down house balance to $132000 for 30 years at 4.75%, saving about $100 month on my mortgage.



D. Carlino continues... $2700 of the $5200 in mortgage closing costs are my property taxes, which is auto-rolled into the refi. The bank will mail me my current $2700 escrow balance back.

So, is this worth going through with? I see that I'm paying $5200 in mortgage refinance fees but get a refund of $2700 in escrows. So it seems I'm only paying about $2500?

Good or bad? Am I missing something here? They have the papers ready to sign, waiting on me. Thanks.

Kate Answers: Pros And Cons Of Refinancing

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Dear D. Carlino,

There are many reasons why and why not to refinance your home loan. The media, big-box banks and financial gurus constantly tell you all about them.

But only YOU can really decide. In fact, your reason to refinance is what matters the most.

Here is a list I made from 20 years of watching my borrowers refinance! I think you'll like it! Fresh Refinance Ideas And Advice

Pros And Cons Of Refinancing - Mortgage Refi Questions

Everyone is asking if their mortgage refi is worth the cost. Here are the 6 most common questions asked by mortgage applicants who are refinancing.
  1. How much am I actually saving if I refinance my home loan?
  2. What are cushions and credits?
  3. How do I know when my refinance breaks even?
  4. What happens to the mortgage payment I already made?
  5. How can I calculate my new monthly house payments?
  6. Which mortgage closing costs should I be watching out for?
Great news! You'll find the answers to these 6 questions at
Is My Mortgage Refi REALLY Worth The Cost?

Pros And Cons Of Refinancing - Compare Mortgages

Catherine found herself in a predicament. She has been offered two refinance choices. But Catherine was suffering from serious overload after attempting to compare mortgages.

Discover how I broke it down for her at Are You Looking For Unique Ways To Compare Mortgages!

Follow along and you can compare mortgage options for your refinance.

D. Carlino, one more thing. I'd like to hear back from you. Let me know if Pros And Cons Of Refinancing was helpful to you. Comment here on the pros and cons of refinancing my mortgage.

Or Ask Kate another question here.

Best wishes,

Ask Kate


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Refinancing from Interest-Only to Fixed Rate Mortgage
by: Homeowner

Can I refinance to a fixed rate mortgage from an interest-only mortgage loan?

Hi, Kate here...

A few years ago, interest-only mortgage loans were a popular way to lower house payments. But now fixed interest rates are more affordable.

Depending on a couple of conditions, you might be able to refinance your mortgage:
1. Do you have a prepayment penalty that limits paying off your mortgage for a specified period?

2. Do you qualify for a new mortgage?

Read more about prepayment penalties and go here for unique mortgage refi tips.

Best wishes, Kate

At 72 years old, is it worth it to refinance?
by: Nancy from California

I'm 72. Four years ago I purchased a six acre ranch that is 1.2 miles from my grandchildren. I have a 6.5% mortgage rate on a $140,000 loan balance. I plan on staying here, near my family, until I pass.

What are the pros and cons of refinancing? I have good credit and a good FICO score... hmm... Thanks for any info.

Hi Nancy, Kate here... In my opinion, the pros and cons are the same at any age.

Re-starting an amortization schedule is a common drawback to refinancing. However assuming you have a 30 year mortgage, you have not yet chipped away much of the principal during the 4 years of your loan term.

Cons include both the hassle and cost of refinancing. You can cut down on the hassle by selecting a qualified mortgage professional and reduce cost by learning to decipher a Good Faith Estimate.

Pros to refinancing would be a lower interest rate and a more affordable mortgage payment!

By the way, lenders are not allowed to factor in age during a mortgage decision. So if you decide refinancing is worthwhile, go for it with confidence!

Now follow the links on this page for much more detail.

Very best wishes, Kate

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You can also ask Kate about your mortgage at Refinancing Advice The Nuts and Bolts.

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