Refinance

Are interest rates lower than when you purchased your home? If they are, it's time to think about refinancing. You could lower your interest rate and your monthly payment -- and save thousands of dollars in payments. So why not take a few minutes to look at our options for refinancing? This could be the perfect opportunity to save money!

Deciding to Refinance

When deciding whether to refinance your home, check the current market for available rates and determine the costs associated with refinancing. These costs can include an appraisal, points and various fees. Use our mortgage calculator to see if refinancing your home is right for you.

Consider how long you plan to stay in your home. If you're planning on moving within three years, the month-to-month savings of refinancing your home may not outweigh the costs of refinancing. But if you are planning to live in your home for at least three years, you might benefit from paying the points and closing costs to get the lowest available rate.

Think about your taxes. Lower interest on your home loan means you'll have less to deduct on your federal income tax return, which may impact the amount of money you'll save refinancing your home. (Consult your tax professional.) You should also consider that the IRS currently requires that you deduct any interest point paid up-front for refinancing over the life of your loan, instead of in the year that you refinanced.

Calculate your current equity. If you've had your current mortgage for at least three years, you've probably reduced your balance by several thousand dollars. So you may be able to "roll" your refinancing closing costs into your new loan and still end up with a mortgage that is smaller than your original one, with a lower interest rate and monthly payment.

Get some cash. One way to make refinancing work for you is to "cash out" -- refinance for more than the balance of your current mortgage. With favorable interest rates, you may be able to cash out without increasing your monthly payments. For example, at an interest rate of 8.5%, the payment on a $200,000, 30-year, fixed rate mortgage is $1,538. But at 7.5%, your same monthly payment would allow you to borrow nearly $20,000 more! (Some states restrict cash-out refinancing. Check with your loan professional.)