Restarting a long term
Refinancing a loan that is years into its schedule into a new long term can lower the payment but increase total interest. Consider a shorter term.
Rolling in too many costs
Financing closing costs increases the balance and interest. Compare paying them in cash, using lender credits or adding them to the loan.
Common errors homeowners make when refinancing, from restarting the clock to ignoring escrow.
Forgetting escrow timing
The new loan may need an initial escrow deposit at closing, while the old escrow refund arrives weeks later. Plan for the cash.
Skipping a payment that is not really skipped
Because interest is paid in arrears, the payoff includes accrued interest, so a 'skipped' payment is not free.
Ignoring the appraisal risk
If the appraisal comes in low, the terms may change or the refinance may not work. Ask about appraisal waivers and estimate value conservatively.
Not comparing lenders
Your current servicer is one option, not the only one. Compare Loan Estimates.
Overlooking a recast or modification
If your goal is a lower payment after a lump sum, a recast may cost far less than refinancing. If you are struggling to pay, contact your servicer about loss mitigation options, which may include a loan modification. Refinancing is not always the right tool.
Sources
Sources checked 10/23/2026. General education only; confirm current rules with official sources and a licensed lender.