All of these are excellent reasons to pursue refinancing, but several issues should be considered first.
Refinancing is similar to the process you encountered when you closed on your first mortgage. It requires an application, credit check, new survey and title search, as well as an appraisal and inspection fees. As you know, this process can be quite lengthy and expensive.
As a rule of thumb, it pays to refinance if you can get an interest rate
at least two percentage points lower than what you are currently paying.
However, every situation is different. Some lenders* are offering reduced
fees or no points. Asking yourself a few questions may help you determine
if you can save money:
Next, figure out what you still owe on the house, how much you're paying each month, and how much you initially paid for the house. Itemize all the expenses of the refinance and estimate your new monthly payments. With this, you can figure out where you break even and when you begin saving money.
Use the Mortgage Refinancing Worksheet below as a guide to help you through this process.
Use this worksheet as a guide to help you: