Over the summer of 2020, refinances of existing mortgages rose over 200 percent
Driven by the lowest interest rates and the highest home prices in recent history, many homeowners are opting to skip the frustrations of moving in favor of lowering their current monthly mortgage payments.

Reduce your monthly mortgage or remove PMI
Trading your current 30-year mortgage for a new 30-year loan makes good sense when you can greatly reduce your monthly mortgage expense if you plan to remain in your home for more than three years.  It can also be a good idea if you have an FHA loan with private mortgage insurance (PMI) that can only be canceled by refinancing if you have more than 20 percent equity, you can refinance into a conforming loan with no PMI due.

When refinancing is a bad idea
Refinancing could be a bad idea if it’s done for the wrong reasons, such as taking cash out of your home to consolidate credit card debt.  Refinancing comes with considerable costs and fees, typically 3 to 6% of your loan amount, which can take as long as three years or more to pay back.  If you decide to move sooner than three years, entering into a new loan to pay debts may cost you money.  Also, you’ll need to avoid the temptation to “reload” your paid-off credit cards with new balances.

The best plan is a healthy break-even point where the costs of refinancing are covered by the monthly savings provided by your new loan.  Explore the numbers with your lender before deciding.