Some Homeowners Are Refinancing Their Mortgages at Higher Rates. Here's Why

After all, most homeowners aren’t inclined to trade in theircurrent mortgage ratefor a more expensive one.

“Although less common, some customers are refinancing at higher interest rates,” says Calcut.

However, not all of those homeowners are locking in lower rates.

The economic landscape has changed significantly over the last several years.

With today’s high cost of living, there’s value in adding more stability to your finances.

This could also be an appealing option if you have aballoon mortgage.

Balloon mortgages are typically shorter-term borrowing options that start with small payments.

After a set period, the remaining balance must be paid in one lump sum.

You’ll also be accepting a new loan structure, loan term and interest rate.

That can sometimes mean giving up a really low interest rate.

You won’t necessarily have to accept a higher monthly mortgage payment by consolidating your debt this way.

First, just like when you purchased your home, you’ll need to payclosing costswith a refinance.

Closing costs typically amount to between 2% and 5% of the total value of the loan.

Consider these drawbacks before you make a final refinancing decision.