Interest rates just hit an all-time low and that means just as much for current homeowners as it does for potential buyers. But the questions of whether to refinance is more complicated than simply asking whether you want a lower interest rate on your loan- of course you do! Refinancing also means that you are going to pay around 3 to 6 percent of your principal balance in costs and fees and in some cases you might be required to pay down some of your principal balance. In order to figure out whether refinancing makes sense you need to figure out how long you plan to stay in your home and amortize the amount the refinancing will cost you over that time period. So if you plan to stay in your home for another 18 months, will the savings from refinancing with a lower interest rate be greater than the cost of refinancing?
It is also important to remember that interest rates are not written in stone. The interest rates that I discuss on this blog are an average of interest rates from many banks, meaning the bank that holds your mortgage might not be offering the absolute lowest rate. Don't drive yourself crazy trying to get the lowest rate anyone has ever seen.
The New York Times recently had an informative article on refinancing. I encourage you to read it.
http://www.nytimes.com/2011/10/23/realestate/mortgages-knowing-when-to-refinance.html?ref=realestate
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