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It is also important to take into consideration the length of your stay in your home. Selling your home before you break even on the refinance will end up costing you more money than if you never refinanced your first mortgage. Another situation wherein refinancing is a good idea is when the interest rate on an adjustable rate mortgage or ARM increases. If you anticipate an increase in your mortgage rates in the future, shifting to a fixed rate mortgage will allow you to avoid the higher interest rates later on. Conversely, if you anticipate a decrease in rates in the future, applying for a new adjustable rate mortgage may be a better idea.