--- title: Pitfalls to Avoid When Refinancing description: Pitfalls to Avoid When Refinancing image: https://info.carringtonmortgage.com/hubfs/ThinkstockPhotos-589116936.jpg --- [Skip to content](https://info.carringtonmortgage.com/knowledge-base/pitfalls-to-avoid-when-refinancing#main-content) ![bell icon](https://info.carringtonmortgage.com/hubfs/raw_assets/public/Templates/2022/svg/Alert-Notifications-Icon.svg) [![Carrington Mortgage Services](https://info.carringtonmortgage.com/hs-fs/hubfs/carrington_logo_final_2col_rgb.png?width=250&height=57&name=carrington_logo_final_2col_rgb.png)](https://www.carringtonmortgage.com) - [About Us](https://www.carringtonmortgage.com/our-mission) - [Careers](https://www.carringtonhc.com/careers) - [Investors](https://www.carringtonhc.com/investors) - [Contact Us](https://www.carringtonmortgage.com/contact-us) [Recent Transfer](https://www.carringtonmortgage.com/new-customers) [Customer Login](https://www.carringtonmortgage.com/login) MAKE HOME WORK Manage My Home arrow-down-anticon/submenu Manage My Mortgage arrow-down-anticon/submenu Learning Center MAKE HOME WORK Manage My Home arrow-down-anticon/submenu - I Am Ready to Start - [Buy a Home](https://www.carringtonmortgage.com/home-loans/buy-a-home/check-existing-customer) - [Refinance My Home](https://www.carringtonmortgage.com/home-loans/refinance-a-home/refinance-step) - What Loan Is Right For Me? 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However, if you aren’t careful it could end up costing you more in the long run. Here are some things to watch out for when refinancing: **Costs** Interest rates aren’t the only costs to consider when refinancing. Talk to your lender about the fees associated with the loan, including closing costs, appraisal fees, and title fees. If the fees outweigh your total cost savings, in the end you could be shelling out more money up front than you would be saving. **Spreading the Loan Term** In the pursuit to save money, you could be resetting the clock on your mortgage. Refinancing is meant to save money by lowering your monthly payment or reducing the amount of future interest. If you have 20 years left on a 30-year mortgage and you refinance into another 30-year term, you are adding years of monthly payments. If you do decide to extend the loan term, you might end up paying more in the long run. **Manage Your Credit** Check your credit score before refinancing. A higher credit score can mean a better rate, but a lower score could hinder the process. If you decide to refinance, don’t rack up more credit card debt before or during the refinance transaction. Typically lenders check your credit when you apply, but they will also check before closing. If you charge up credit or open new cards while refinancing, you run the risk of being declined. **Lock Your Rate** Once you are comfortable with the costs associated with refinancing, don’t wait too long to lock in your rate. Rates are unpredictable and can change every day. If you find a rate you are comfortable with, have your lender lock it in. This will guarantee your rate for the period of the rate lock. **Prepayment Penalty** Although they aren’t common, check to see if your current loan has a prepayment penalty. This means that if you refinance prior to a certain date, you may be required to pay a fee for paying the loan off early. Review your contract or talk to your lender to see if a prepayment penalty would apply to your loan. To sum it all up, be smart about refinancing. Ask your lender for the fees associated with the loan. Don’t let a good rate pass you by, lock it in. 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