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This is when you should not refinance a mortgage

People refinance their homes for different reasons. If it’s a home you plan to live in forever, it would make sense to refinance for a lower interest rate and a lower monthly payment.

Sometimes there are times it does not make sense to refinance though.

One major sign to not refinance is a poor credit score. The higher your score is, the lower the interest rate you’re likely to get.


If your credit looks like it may have dropped recently, you probably won’t get a good interest rate.

What happens when you refinance is you’re replacing your old loan with a new one. The loan, after being approved, would go toward paying off the current mortgage.

If refinancing, your credit score shouldn’t drop too much because it’s replacing debt, not creating more.

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Reasons your credit may be lower is because you missed a payment and it’s marked as late.

You may also have a bad utilization ratio with far more debt than line of credit.

Inquiries can cause a credit dip as well, like applying for loans or credit cards.

If this is the case it’s better to wait to refinance.

Related: Is purchasing a home a wise investment at the moment?



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