Refinancing comes with certain costs and trade-offs: - If you refinance and then move again in the next few years, you likely won’t have enough time to break even on the closing costs. - You could get slapped with a prepayment penalty if your lender charges a fee for paying off your mortgage earlier than expected. - You could wind up paying more in total interest if you refinance to reduce your monthly payment and take longer to repay your mortgage. - Shortening your loan term means your monthly payments will increase, and you might not be able to keep up with them anymore if your income changes or an emergency happens. - Refinancing can cause your credit score to dip temporarily. Orlando says you should also make sure to review your credit report before refinancing. If there are any inaccuracies, it could prevent you from getting a lower interest rate.