Refinancing your mortgage can be a smart financial move, whether you’re looking to lower your interest rate, access equity, or consolidate debt. But despite its benefits, refinancing is often misunderstood—leaving many homeowners hesitant to explore this option.

At Homewise, we regularly hear concerns and misconceptions about refinancing. In this article, we’ll debunk the most common refinancing myths so you can make informed decisions and take full advantage of the financial opportunities your home offers.

1. Myth: Refinancing Is Only Worth It for a Lower Interest Rate

Reality: While lowering your interest rate is one of the most popular reasons to refinance, it’s far from the only benefit. Refinancing can also help you:

  • Access home equity for renovations, investments, or large purchases.
  • Consolidate high-interest debt (like credit cards or personal loans) at a much lower mortgage rate.
  • Switch to a fixed-rate mortgage to protect against rising interest rates.
  • Shorten your amortization period, helping you pay off your mortgage faster.

💡 Thinking about refinancing? Start with our simple online application and connect with the Homewise team to explore your options.

2. Myth: Refinancing Resets the Clock on Your Mortgage

Reality: Many homeowners believe that refinancing means starting over with a 25- or 30-year mortgage. In reality, refinancing offers flexibility—you can choose to:

  • Maintain your existing amortization period.
  • Shorten your term to pay off your mortgage sooner.
  • Extend the amortization for lower monthly payments (though this may lead to more interest over time).

Pro Tip: Refinancing doesn’t have to mean more years of payments. Work with your Homewise advisor to structure a refinance that aligns with your financial goals.

3. Myth: You Can Only Refinance at the End of Your Mortgage Term

Reality: While refinancing at the end of your term can help avoid penalties, you can refinance at any time. The key is weighing the potential penalties against the savings or benefits of refinancing sooner. In some cases, the long-term savings from refinancing can outweigh any penalties you may incur.

Example:

  • You have three years left on your term at 6%. By refinancing at 5%, you save enough in interest to offset the penalty within a year.

🏠 Not sure when to refinance? Our team at Homewise can analyze your situation and help you decide if refinancing now makes sense.

4. Myth: Refinancing Is Expensive

Reality: Refinancing comes with costs (like legal fees and potential penalties), but these are often offset by the financial gains you make. Many lenders also offer cashback incentives to help cover fees.

Typical refinancing costs include:

  • Penalty fees for breaking the term early (if applicable).
  • Legal fees (usually $800 to $1,500).
  • Appraisal fees (around $300 to $500).

However:

  • Lower monthly payments, debt consolidation, or accessing equity can make refinancing worthwhile.

Pro Tip: At Homewise, we connect you with lenders who offer competitive refinancing packages to minimize your upfront costs.

5. Myth: You Need Perfect Credit to Refinance

Reality: While good credit can secure better rates, you don’t need perfect credit to refinance. Many lenders offer refinancing options for homeowners with fair or even poor credit—especially if you have significant home equity.

If your credit isn’t where you want it to be, refinancing can still help by:

  • Consolidating high-interest debt, making payments more manageable.
  • Improving your credit score over time through more structured repayments.

Ready to explore your options? Apply for mortgage refinancing with Homewise today.

6. Myth: Refinancing Is Complicated

Reality: The refinancing process is more straightforward than many homeowners expect—especially when you work with an experienced advisor. At Homewise, we guide you through the entire process, handling the heavy lifting and connecting you with lenders that fit your needs.

The process typically involves:

  1. Applying for refinancing (takes 5 minutes online).
  2. Appraising your home (if necessary).
  3. Reviewing offers and selecting the best lender.
  4. Completing the paperwork and finalizing the new mortgage.

Pro Tip: Our team makes refinancing simple. Apply through Homewise and let us take care of the rest.

7. Myth: You Can’t Refinance If You Already Have a HELOC

Reality: Having a Home Equity Line of Credit (HELOC) doesn’t disqualify you from refinancing. In fact, refinancing can help consolidate your HELOC balance into a fixed-rate mortgage—often at a lower interest rate.

Alternatively, you can increase your HELOC limit through refinancing if you need more access to equity.

Learn more about HELOCs in our guide on Home Equity Lines of Credit.

8. Myth: Refinancing Means Losing Equity

Reality: Refinancing doesn’t reduce your home equity—it simply converts some of it into accessible funds. This can be beneficial if you use that equity for:

  • Renovations that increase your home’s value.
  • Investments that generate returns.
  • Paying down high-interest debt.

By strategically refinancing, you can grow your wealth over time without depleting your assets.

9. Myth: All Lenders Offer the Same Refinancing Options

Reality: Different lenders offer varying rates, terms, and conditions. Shopping around is essential to securing the best refinancing deal. At Homewise, we work with over 30 lenders to ensure you get the best possible rate and terms.

Pro Tip: Don’t settle for the first offer—let Homewise connect you with the best refinancing options tailored to your goals.

10. Myth: Refinancing Always Increases Your Debt

Reality: Refinancing can reduce your debt if used to consolidate high-interest loans. By rolling debts into a lower-rate mortgage, you simplify payments and pay less interest overall.

Example:

  • Credit Card Balance: $20,000 at 19% interest.
  • Refinanced into mortgage at 5% interest = Significant savings.

💡 Looking to consolidate debt? Refinancing might be the answer—start your application today.

Conclusion

Refinancing is a valuable tool that can help you lower payments, access equity, and manage debt—but misconceptions often prevent homeowners from exploring their options. By debunking these myths, we hope to provide clarity and confidence as you consider refinancing.

Thinking about refinancing? Let Homewise simplify the process and help you find the best solution for your needs. Apply in minutes and start maximizing your home’s potential today.