With mortgages being as big an expense for most of is as they are, how can I pay less and free up more of my money? A mortgage refinance can be a big help, but how do you know when to make that move? A lot of it has to do with current mortgage rates. For instance, rates now are pretty low, so it may be a good time for you to think about a refinance. However, there are things to take into account when considering a refinance since the current mortgage rate is not the only thing that will determine whether or not it is time to refinance.

Refinancing is only slightly different than making a new purchase. In both situations it is important to consider your own financial situation before making a move. The current mortgage rate are what will likely affect your fixed or adjustable rate mortgage or refinance the most, but you must also shop around. Mortgage companies are highly competitive with one another. They don’t all have the same rates available, but with overall current mortgage rates, they have a baseline they use to establish the rates they will offer. Much of it depends on the package you choose.

Mortgage companies offer a number of packages. Much of what your payment on your refinance will be is based on what you choose. You can get lower rates if you go with a shorter term loan, you can go with a fixed rate loan, an adjustable rate loan, or even an ARM that is fixed for a certain number of years and then become adjustable. When deciding if the current mortgage rate is going to make it worth refinancing for you, think about what you are going to do in terms of type of mortgage. Some may lower your payments, while others may not.

Another factor to consider is closing costs. Many mortgage companies are going to charge you administrative fees when putting together a refinance for you. In that case where those fees are “waved” they will either be wrapped back into the loan or they may add percentage points to the current mortgage rate in order to make up the money loss. If you choose to pay the closing costs, then you will need to figure out if the money spend up front is worth what you will save over the course of the loan. Since most loans are 30 years, it will be worth it if you don’t mind spending the money in one lump up front.

Mortgages can be confusing, and when you hear about current mortgage rate on the radio, television, or print ads you may think that the decision to refinance is simple. You likely think that if the current mortgage rates are lower than what you are paying, then it is worth it. It may be, but take the time to look into up front costs, added percentage points, what mortgage package you are looking for, and your current financial situation before you determine whether or not you are a good candidate to refinance.

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