The first thing you need to know is the interest rate on your existing mortgage. Then, make a comparison between



that rate and the one you might be offered in case you

should opt to refinance. If the current interest on your

mortgage is not at least one and a half or two percentage

points higher than the present market rate, then,

refinancing won't be an excellent opportunity for you. Besides, in a refinance you'll face closing costs that

might include an appraisal and fees meant to pay off your

existent loan in advance. In case your new interest rate

should be hardly better, a long time will pass before you

had paid the amount of your new loan.

Another thing to consider before you decide that it's time to refinance is your future plans. If you are considering to move

house in less than two years, a new loan is not worth the

costs. If, for example, you expect your job to require a move or you plan to sell your house soon for the equity you've accrued, you won't likely recoup the cost of closing a new loan.

This does not mean refinancing is never a good

alternative? Not at all. In fact, there are some times when a refinance loan is an excellent financial move. Maybe you took out your original loan when your credit score was low and the only way you could get a loan was to accept a high interest rate. That's sometimes the case with first time buyers, but you might have increased your credit score if you've made regular payments for a couple of years. In that case, it could very well be time to refinance. You could get a much better rate and find yourself building equity much more quickly than with your current loan.

It can also be that you had requested a loan at a time

when credit and market conditions were adverse, and now it

is a burden for your financial position. If you are currently financed at a variable interest rate, you may simply want the security of knowing the exact amount your mortgage payments will be each month. In those cases, it could be time to refinance.