Though some mortgages may seem like a lifetime commitment, many people refinance, or arrange for a new mortgage with a lower interest rate or different term.

Because interest rates change constantly, a good rate when you buy may be much higher than average rates in a few years. Refinancing can bring your housing expenses more in line with what other people are paying. The usual rule of thumb is that it pays to refinance if you can get an interest rate at least two percentage points lower than what you’re currently paying, although a smaller difference may save you money as well.

Refinancing doesn’t come cheaply, though. It means paying off your original mortgage with a new loan from a bank. Plus, you often have to pay up-front fees and additional closing costs, even if your existing mortgage is only a few years old. That’s especially true when you switch lenders.

True or false? If you refinance, you’ll probably have to pay various fees and repay closing costs. True False

Why refinance? Click here for the answer!

That’s incorrect! When you refinance, you may have to pay up-front fees and closing costs, even if your mortgage is only a few years old.

That’s correct! When you refinance, you may have to pay up-front fees and closing costs, even if your mortgage is only a few years old.