If you plan to remain in your current home for at least five years and your current mortgage interest rate is 1% or more higher than current rates, you probably should consider refinancing your mortgage. For most people, it is not too horrible a process. You will have to choose between Interest only loans, adjustable rate mortgages, or 15, 20 or 30 year fixed rate mortgages. Interest only loans will usually result in the lowest monthly payments, since no monies are going to pay down principal. They could make sense for many people that have other expenses that will hit them in the next 5 to 10 years like child care expenses.
Personally, I prefer mortgage companies to the big banks to fund a mortgage because they tend to be easier to work with and the service is often better. You can find them on the Internet and they will provide you a mortgage consultant to help you figure out if refinancing makes sense for you. You have to compare the cost to refinance with the lower payments you may realize to see if it makes sense. Certainly, if you do plan to stay in your home for 5 years or more, it could make very good sense.
I don't believe it makes sense to pay points, which are really prepaid interest to get a lower mortgage interest rate, since rates are so low now even without paying points. And, just know if the mortgage company is offering you a no cost deal, it just means that the interest rate will be higher. Further, your credit rating will determine the mortgage interest rate you are offered. So, ideally if your credit rating is 750 or higher, you should be in great shape. If your credit rating is below 700, the mortgage interest rate you can get may be a little higher. In any case, it is worth the time to see if refinancing your mortgage makes sense for you.
