We have lived in our house for 3.5 years and plan to purchase a new home in 1.5-2 years. Our mortgage is 6.25 30 year fixed. We took on a 2nd mortgage about a year ago to pay off debt. Now we want to refinance and roll the two together with our existing car loans and credit card, so we can fix any credit problems, make payments easily, etc. so it will be easier to buy the next house. The new rate being offerred is 6.95%. Our mortgage payments will be $400 more, but we will be saving an additional $400 in monthly payments. We figure our credit will improve greatly. We were worried about paying down a credit card ';over 30 years';, but the refinancing co. reasoned that we will only have this ';bigger'; mortgage payment and interest rate for the next couple of years; it's the mortgage for the new house we need to be concerned about. (And by doing this, we will improve our credit and chances for a better mortgage next time.)
Hope that's enough info. for detailed info on pitfalls of refi.