“Why am I considering refinancing my home?”

The most common reason to refinance is to lower your monthly payment, and/or to take advantage of lower interest rates. I can’t think of anyone who wouldn’t appreciate smaller bills each month!

• Many lenders and brokers encourage refinancing when interest rates are at least 0.5% lower than your current interest rate.

At the time of this writing, interest rates are among the lowest in history. Definitely the lowest that I’ve ever seen in my lifetime — which means that almost anyone could benefit from refinancing before the market starts to climb back up.

Perhaps you got into a variable-rate or balloon-payment mortgage and want to “lock down” your rate to avoid unexpected increases in the future.

Once again, now is the time to do it. Many people that I know got their first house during the last decade. They typically had somewhat shaky credit and had to go for the lower rates of an ARM (adjustable rate mortgage) in order to qualify for a monthly payment that they could afford.

These people now have some equity built up and a better credit history overall; they can reap the benefits of a new mortgage with a fixed rate, at a time when interest rates have pretty much nowhere to go but up!

• Some people may actually benefit from refinancing to pay more each month, or to have more of their same-size payment go to interest. If you’d like to get a shorter term, especially while interest rates are so low, this approach pays off very well in the long run.

(If all of this sounds like Greek to you, it may be helpful to refer to our Loans section to better understand things like loan types, rates, terms, et cetera…)