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Refinancing a mortgage — replacing an existing mortgage with a new one — allows homeowners to take advantage of lower rates or adjust the length of their loan term, among other potential benefits.
But stubbornly high mortgage rates has placed demand for refinancing on a downward trend in recent weeks, though still higher than the same period a year ago.
While the pros of refinancing vary on a case-by-case basis, and might not make sense for everyone, there are some common misconceptions about everything from costs to requirements that can misleadingly steer homeowners towards, or away, from a refinancing.
These are eight of the most common myths about mortgage refinancing — and the truths behind them.
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While you can certainly save money by refinancing your mortgage at a more favorable rate or loan term (in fact, that’s one of the main reasons people do it), refis do come with closing costs like any other mortgage. These fees can come out to as much as 2-5% percent of the new loan principal, according to Bankrate.
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