Equity loans, an in-depth look, an in-depth exploration
Another common scenario is when the homeowner has an adjustable rate mortgage (ARM) and the interest rate on that mortgage "re sets" to a higher rate. If you anticipate an increase in your mortgage rates in the future, shifting to a fixed rate mortgage will allow you to avoid the higher interest rates later on. If you think rates are likely to go down in the long term, it may be smarter to refinance into a new adjustable rate mortgage. If you are having difficulty paying your monthly mortgage costs, mortgage refinancing will not only extend the duration of the loan, but will reduce your monthly payments as well. Although this can help you get through a difficult financial period, you will end up paying more in interest over the course of the loan.