As a result of the depressed economy, lenders have reduced interest rates to historic lows but many homeowners are not getting the benefits as they see refinancing as a hard process.  (See another interesting article from NY TIMES correspondent Bob Tedeschi) This is not the case so if you have an interest rate of more than 5.5% you need to call quickly investigate the benefits of refinancing your mortgage.  While lenders have tightened up their underwriting criteria (you will need good credit, income and your home must have positive equity) if you can qualify to refinance it should save thousands of dollars. 

A couple things to consider

1)  Difference in rates between existing and new loan
2)  Closing Costs
3)  Are you increasing your mortgage’s principal balance and loan term?
 
Refinancing should not be a mystery.  Call your lawyer with a copy of your current mortgage statement and he can give you a quick run down on what to say to a lender and how to save a couple dollars on lender and title company fees.  Call a couple of lenders and get a few good faith estimates (GFE) to review with your lawyer.  He will quickly show you the differences between the estimates and calculate the true closing costs.  Divide the closing costs by the monthly cost savings and you will get the time needed to recover the closing costs (number of months).  For the refinance to make sense you must be sure that you will keep the new mortgage long enough to recover the costs.

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