Refinancing has been all the talk again with refinancing rates being less than some homeowners financed rates. However, there are some reasons that refinancing is not a good idea for people. Remember, to each their own and make sure you make the right informed decision for you and your family.
If you have had your current mortgage for a long period of time, you may not benefit from refinancing. This especially holds true if you have had your current mortgage for at least ten years. When you refinance, the payoff period increases (it starts over again) unless you refinance into a shorter loan. For the most part, lower rates are associated with a shorter loan length. So if you choose to decrease the length of your loan, you may wind up saving money. Keep in mind that this would mean your monthly payment would likely be more expensive, so this option may not be one that you can afford.
Another aspect to look at is that when you refinance, your total interest cost may increase. We would recommend you do a cost analysis between what your current mortgage is with your current interest rate and compare it to what your refinanced mortgage may look like. Be sure you look at both your monthly savings and your total, long-term savings. Doing this side by side cost analysis will give you the big picture to show you if it is a financially good idea for you.
What is your credit score like? If your credit score is not sufficient enough for you to qualify for a competitive interest rate, you may not benefit from refinancing at all. If your credit score yields you a good refinance rate, then that is a different story. It would not hurt to at least look into it!
Although this may be common sense, we have to reiterate the fact that it is only a good time to refinance if your savings are more than your cost! Be sure to do your homework and look into everything thoroughly.