[HIDEK6]

Every time you refinance, the rule of 72 begins again. That means that the vast majority of your house payment is used to pay interest, not to reduce the principal.

If you have paid on your mortgage for say, 10 years, most of your payment is going toward reducing the principal.

This is an important consideration in deciding whether to refinance.

[CatOwner]

Under most circumstances, that's true. Our credit union allowed us, for a few, to adjust the rate and term of our fixed rate loan.

We started with a 30-year fixed rate loan. After seven years, we adjusted/refinanced the rate and set the new term to 20 years (putting us on a total of 27 years).

Four years later, we adjusted the rate again and set the new term to 15 years (putting us on a total of 26 years).

Three years later, we adjusted the rate one last time and set the new term to 10 years (putting us on a total of 24 years).

We would have paid off the loan this year if we hadn't moved back in 2018. The final interest rate was 2.625% for 10 years.

This tactic worked for us because we never increased the time with which the mortgage needed to be paid off. For those who keep refinancing back to 30 years, you have a valid concern.

[No Party Affiliation]

Reduction of principal was not as important as reducing the monthly payment. In the meantime the house’s value has increased about 6% per year thus building equity with a lower monthly payment.