While there’s a lot of upside to short refinancing for you as the borrower (namely, the ability to stay in the home with a reduced monthly mortgage payment), there are also some pitfalls to consider. Your credit score will likely drop because a short refinance will show up on your credit report as a settlement rather than a repayment and because you repaid a debt (your original mortgage) for less than agreed. As a result, it may be difficult to obtain another mortgage for a set period, Phil Crescenzo, division manager of Nation One Mortgage, said via email.
