Rates are dropping low enough that it might make sense to refinance your mortgage, but keep a few things in mind before you do so.
Refinancing can negatively affect your credit score in the short run.
If it saves a few hundred dollars a month, then it may well be worth it.
However, refinancing can affect your credit score in several ways.
If it’s reported to the credit scoring agencies as the same loan, but with changes, here is how it might affect your credit score: the credit inquiry that will be done can make your credit score drop a few points, because any credit inquiry tends to lower your credit score.
Changes to the terms of the loan will be reported, and that may also affect your credit score.
If the modification is reported as a “new” loan that will negatively impact your credit score more, again, in the short run at least. This is because the credit agencies will see the new loan as having a new “open date” which generally means that a person has taken on a new credit obligation. This means that the person is more of a credit risk because they owe more money.