Investors and home owners both watch as interest rates fall. Home owners know about their interest rates, closing costs, mortgage payments, and the other expenses they've had to deal with to get their mortgage. When interest rates are falling because of the current market's conditions, everyone has to compare the pluses and minuses of how those interest rates affect their mortgage refinance opportunities.

Declining interest rates may be surrounded by sluggish economic conditions, and that is certainly cause for concern, especially considering the resultant uncertainty of both employment security and returns on market investments. When refinancing mortgages, though, it must be determined whether the initial capital outlay required for the refinance will outweigh the interim advantages of monthly savings that result from lower mortgage payments. If the expenses do not exceed the benefits, then it is certainly advisable to study the matter more thoroughly, in order to determine if a refinance will increase cash flow for you by reducing your mortgage payments, and thereby free-up additional disposable income.

In general it is the policy of most financial institutions to recommend that further mortgage refinancing may be worthwhile when interest rates fall more than 2 percent below your current mortgage. This is hotly disputed, however, and most now agree that while it could have happened in previous eras, it does not now. In present times the borrower has a wide range of choices when it comes to refinancing his mortgage. Those who now occupy the centre of the income range are becoming increasingly knowledgeable in money matters and many own stocks and shares, a fact not true for previous generations. Of course the potential rewards of such pursuits are accompanied by great risk and many fall into credit card debt are crippled by interest rates.

For home loan refinancing, you should consider the following critical factors:

1. Current Market Interest Rate

2. Current Mortgage Interest Rate

3. # of Years Left Remaining on Your Existing Mortgage

4. # of Years That You Plan to Keep the New Mortgage

5. Cost Comparisons of Lowered Closing Costs From Competing Banks

6. Existence of a Prepayment Penalty with Current Policy

Now that the critical factors involved in refinancing have been discussed, jot down a few of your own thoughts on the subject. Also take into account, how refinancing could affect your cash flow and if it will generate additional cash flow from your monthly savings plan. Lastly, run a few financial scenarios using an online financial or mortgage calculator. By now, you should have some clear cut notions on how this will affect you. Therefore, you should speak with a loan officer regarding refinancing your mortgage.

Note: Compare the value of your money with benchmark currencies. If you find that the value of your currency is declining at a historically unusual rate, you may need to take in to consideration another factor - the current and future value of money. Ask your financial advisor to walk through this with you to determine the appropriate values.