Check the market closely
to determine the available rates and the costs associated with refinancing.
These costs can include items such as an appraisal and other various fees
and points. Then determine what your new payment would be if you refinanced.
You can estimate how long it will take to recover the costs of refinancing
by dividing your closing costs by the difference between your new and old
payments (your monthly savings). However, the ultimate amount you may save
depends on many factors, including your total refinancing costs, whether you
sell your home in the near future, and the effects of refinancing on your
taxes. The old rule of thumb used to be that you shouldn't refinance unless
the new interest rate is at least two percentage points lower. However, many
companies are now offering zero point loans and low-cost refinancing. Therefore,
even if your rate change is less than one percentage point, you may be able
to save some money by refinancing.