7 biggest myths about mortgage refinancing and what to know instead

Refinancing a mortgage isn't a free action. Homeowners should prepare for closing costs, which typically range from 2% to 5% of the new loan amount. These costs can overwhelm the savings from lower monthly payments once the break-even point is reached. While a lower interest rate is tempting, fees can outweigh the benefits of reduced monthly payments. Even though interest rates have increased in recent years, refinancing might still be a wise choice for some homeowners.