The advisability of refinancing your home depends on the interest rate being offered, compared to the interest rate you are currently paying. To move forward, a rule of thumb is that the interest rate should be a minimum of 2 percentage points lower than what you currently have. Your mortgage lender should be able to advise you on the rate you may qualify for. Then, consider additional costs such as appraisals, closing, and points from the lender, which may not be obvious when just looking at the interest rate savings. Then compare what your total payment would be after refinancing to what your current payment is. Divide your closing costs by the monthly savings with the new monthly payment, to see if it would truly be a worthwhile endeavor. This will be determined, in part, by how long you plan to stay in your home. If you’ll soon be selling, it may not make good financial sense to refinance.
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