4 Common Refinance Loan Myths and the Truths behind Them

Buying a home is one of the most exciting things you can do in your life. Apart from being a sign of financial stability, it offers you a safe place to stay and relax in, helping you live more comfortably. It’s easily the most important place in your life, as you can do everything from sleep, exercise, practice your hobbies, or even start your own business in your home. However, paying for it is often an entirely different matter, particularly when you’re hoping to get a refinance loan on it.

Refinancing a mortgage on your home means you’ll have to pay off your original mortgage and replace it with another one, usually with different terms and interest rates. While there are many benefits to taking a refinance loan, it is still surrounded by many myths and misconceptions. Here are four typical mortgage refinance myths and the truths behind them:

1. It Will Reset Your Loan Term

A homeowner’s worst nightmare when paying off their mortgage is having to start over, especially when paying a large amount of interest from the get-go. In fact, this may put you off altogether from getting a lower rate on a new loan.

However, it’s possible not to start over as long as you choose the best mortgage lenders around. These days, many lenders have written custom loans with considerably unorthodox terms, such as 12 or 18-year options instead of your standard 10, 15, or 30-year terms. By going for these non-traditional terms, you may end up saving thousands of money in interest.

2. It Will Make You Lose Your Equity

People believe that refinancing your mortgage involves losing your equity. However, this is simply not true, especially if you aren’t taking out a cash-out refinance. If you add to your loan principal, you’ll affect your home equity, but lowering your interest rate, shortening your term, or forgoing mortgage insurance will not impact it. In fact, if you opt for today’s favorable interest rates, you can save money while building your equity further.

3. It Won’t Be Available until Well after Your Last Refinance

Although you’ll indeed need to wait a certain period before taking out another refinance, this option is available to you as soon as six months after your last refinance loan. You may find yourself in this situation if rates are more favorable or if you regret taking a 15-year loan instead of a 30-year loan. Regardless, this option is available to you as long as it’s been at least six months since.

Still, it doesn’t mean that refinancing your loan yet again is the right decision. It ultimately depends on your financial goals, situation, how long you plan to reside in the home, and other details. 

4. It’s Not a Good Idea to Move into Long-Term Debt

If you’ve taken on a short-term loan, like 15 years, and you’re considering taking a 30-year loan to lighten your monthly payments, you may have been cautioned against this choice. However, the truth is that if you’re struggling to pay your mortgage every month due to the higher amount and shorter term, the wiser move may be to switch to a longer-term loan. Credit card rates are much more expensive than mortgage rates, which can affect your ability to pay your loan off every month. In this situation, refinancing your mortgage and choosing a longer-term loan may be the answer to your problem.


Mortgage refinancing has helped thousands of homeowners afford their dream home, especially when their original mortgage is no longer the most advantageous loan for their situation. By being aware of these refinance loan myths and contacting your local mortgage lenders for refinancing advice, you can determine the best course of action to take.

Hawkins Home Loans is home to the best mortgage lenders in Sacramento, helping aspiring homeowners afford the property they’ve always wanted. Whether you’re purchasing a home, refinancing, or hoping to take advantage of your home equity, we use our decades-long industry expertise to match you with a mortgage that suits your needs. Contact us today to find out more about what we can do for you!