Qualifying

• Refinancing a mortgage requires going through the same application process that you did when you obtained your first mortgage. Bad or poor credit will affect your ability to refinance and the interest rate that you will be offered. Lenders may have low rates available, but that does not mean that you will qualify for those rates unless you have a good credit report and score.
  
  

Costs

• You should always consider the cost to refinance before making any decisions. You may be able to obtain a lower interest rate if you can refinance your mortgage without using all of the equity in your home. Closing costs are a given. If you must pay for another appraisal, that will be another cost.
  
  

Benefits

• When homeowners refinance their home mortgages in pursuit of a lower interest rate, they can choose to keep the same monthly payments. In some cases, the homeowner can lower the time remaining on the home mortgage when refinancing. You should always figure out which payment option would benefit you more.
  
  

Considerations

• If you are thinking about refinancing a mortgage, you should sit down and total your debts to see if maybe you would not be better off taking a consolidation loan for one monthly payment. Even with a lower interest rate, however, it is not always a good idea to consolidate debts into a home mortgage.
  
  

Warning

• If your current mortgage has a clause that says that you can be penalized for early payoff, you must check with the lender to find out what costs, if any, you will incur if you refinance with anther lender. Your current lender may allow you to refinance your mortgage without penalty so long as you do not use a different lender. Read the fine print on your original loan papers.