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There are many factors to consider before refinancing. Besides the obvious concerns of what lender to choose and how long the process will take, examining your long term choices are essential.

If you have less than ten years left before your current loan is paid off then, unless you have a major financial need, it may be best to hold off refinancing and look into a second mortgage of some sort. If you have a good length of time before your loan is paid off the rule has generally been to look for an interest rate at least 2% lower than what you currently have. By lowering the interest rate by this amount your monthly payments will be significantly less if you refinance on the same term length you currently have. On the other hand if your current payments arent too much too handle refinancing with a shorter term and significantly lower interest rate will keep your payments relatively the same but you are able to build equity much faster.

Are there any cases in which you should settle for less than a 2% interest rate reduction? The short answer is yes. A good example would be if you have an adjustable rate mortgage (ARM). Even if the rate isnt significantly lower than what you currently have, being on a fixed rate and knowing that there arent any surprises around the corner is often worth doing the refinance.

Contrary to what many lenders tell you it is not always financially sound to refinance. Make sure the interest rate youre getting is good enough to make a difference and make sure you plan on being in your home long enough to reap the benefits. Every individual situation is unique so just make sure to decide carefully.

Visit Refinance Smarts to view our Recommended Refinance Lenders online. Also, visit Refinance Smarts to obtain some information on the Home Refinancing Steps you should take when refinancing your mortgage.