Due to the rapid decline in interest rates, many homeowners can now feasibly consider mortgage refinancing, giving them a more affordable mortgage to pay off. That also means they can save more money in the long run by refinancing at a lower rate. If mortgage rates continue to dip, more homeowners will enjoy a great chance to save on money.

However, if it’s your first time refinancing your housing loan, you’ll run into a few surprises, like closing costs, credit checks, and resetting your payment schedule. Here are five common myths about a mortgage refinancing and the truths behind them:

There are No Costs to Refinancing

Homeowners typically hear a lot about the potential savings they can enjoy by refinancing their mortgage, although they rarely hear about the fees that come with it, like closing costs. That means they’ll have to spend a little extra to refinance, which may not be worth it to some homeowners.

The fees can reach 2 to 5 percent of the principle of the current mortgage, which means the upfront payment can be more than thousands of dollars. Although many lenders will allow you to roll these costs into a new loan, it will increase the principal you’ll have to pay, making this aspect incredibly important to consider.

The Interest Rate is the Only Determining Factor

The goal of many homeowners when refinancing their mortgage is to get the lowest interest rate possible. However, they should also look at the loan term, which plays an important role in determining how much money you can save. 

Refinancing to a loan with the same term resets your payment schedule, adding even more time for you to pay. The added years will cost you money since the initial payments are mainly interest-only to the provider.

Refinancing Will Impact Selling the Home Later On

Refinancing your mortgage will not put another lien on your home, unlike home equity loans. That means it won’t impact when you can sell the property. Equity-backed loans like HELs and HELOCs use your house as collateral, which means you won’t be able to sell until you’ve repaid the loans. However, refinancing is based on your ability to repay the loan, backed by your credit and employment history. It also exchanges the primary lien on the home with a new one.

You Don’t Need a Credit Check

Lenders will require a credit check when you want to refinance your mortgage, which surprises many homeowners. They often think that there’s no reason for lenders to review their credit since they’ve been repaying the loan on time. Still, to these lenders, you’re applying for a new loan, which means they’ll have to verify your current financial situation. If you have an excellent credit profile, though, you’ll receive offers of the lowest interest rates.

For this reason, before refinancing, check your credit score and DTI ratio. Ensure your financial picture is in good shape before applying to ensure you get the best rate possible. Doing this will ensure that refinancing your mortgage will be worth the effort and money spent.

Mortgage Refinancing Can Be Done Only Once

Lastly, some homeowners believe that you can refinance your mortgage only once, but that isn’t true. You can refinance your housing loan many times, but due to the considerable fees, you’ll want to do it as few times as possible. Be sure to use a refinance calculator to check how much it will cost you, primarily if you refinanced your loan within the last few years. Additionally, it’s best to leave a lot of time between refinances, as lenders will look into this when reviewing your application.


There are many benefits to refinancing your home mortgage, but it’s essential to know the truths behind the most common myths surrounding it. Now that you’re aware of these misconceptions, you can make a more informed decision about getting a new mortgage while rates are low.

Cal Coast Funding is the best mortgage lender in San Diego, priding itself in offering competitive rates and outstanding service. We can help you refinance your housing loan, apply for a conventional loan, and more. Contact us today to learn more about what we can do for you!