Loans What experts say
If the new mortgage's terms are chosen carefully, mortgage refinancing can be a valuable method of improving one's finances. For instance, mortgages with a lower interest rate are usually an excellent investment. In determining the total cost of any type of loan, the interest rate is the variable with the most weight, so a mortgage with a lower interest rate usually offers substantial savings. However, if a new mortgage offers a lower monthly payment, but the interest rate is no lower than the old mortgage's interest rate, the new mortgage will have a higher total cost. This effect can be seen in mortgages that have a higher interest rate but drop the monthly payments by extending the term of the loan.