Because refinancing involves applying for a new loan with new conditions, you're basically starting from the beginning. However, you don't have to choose a term based on the term of your original loan or the remaining repayment period. When you refinance, you replace your original mortgage with a new one. That means you can start over with the loan effectively.
For homeowners, refinancing is a great way to lower the cost of their mortgages when interest rates fall, allowing them to get a lower interest rate than they currently have. So how much should mortgage rates go down before considering whether it's worth refinancing? The traditional rule of thumb is that you should refinance if your rate is between 1% and 2% below your current rate. If you want to refinance without “starting from scratch” for 30 years, the easiest approach is to refinance your mortgage for a shorter loan term to accelerate repayment. A refinancing calculator can help you determine if refinancing a mortgage will save you money long-term money.
Refinancing will hurt your credit score, as a credit check is done when you refinance your mortgage; however, this is temporary and your score will be adjusted over time. Consumer loans that are normally considered for refinancing include mortgage loans, auto loans, and student loans.