Why is refinancing a wise idea? There are quite a number of ways this can be answered. One such way would be to examine the process mathematically and doing so from a perspective of long term financing. Most people will not think about what they could do with the money they save on a mortgage by procuring a lower interest rate. Running a few figures through The IOU Calculator might be revealing.
Imagine having a mortgage of $200,000 for a 30 year period. Their is a 4% interest rate on the mortgage. This means you will pay about $985 a month and your final total payment will be. $343,739. Refinancing to 3.3% means you will pay $876 a month. Overall, you will save $28,462 on the mortgage. Now, that is what you will have saved. We have not broached the topic of investing.
You will save $1,308 per year. How much would you end up with if that $1,308 was invested at just 3.5% interest over the course of 30 years? $68,795.85.
Now do you see why it may be wise to cut down on interest rate costs and refinance a mortgage/? There are far better things you can do with your money. The process of putting your money to better work starts with cutting down on your interest rates.