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Article creds: Bankrate.com

The biggest question is whether refinancing makes sense for you.

Bill Packer, executive vice president and chief operating officer of eLEND, provides a quick tutorial on factors to consider. “Refinancing a mortgage is a factor of three key items: (1) the after-tax monthly savings (new payment compared to old payment after any tax-favored treatment); (2) the amount of time that I intend to be in the home; and, (3) the cost to obtain the new mortgage. Once you know these three things, you can then calculate your return and see if it is positive.”

Shelby McDaniels, channel director for corporate home lending at Chase Home Lending, offers a few scenarios where you could benefit from current market rates:

• When it lowers your monthly rate and/or payment.
• If you can reduce loan term/remaining payments with minimal increase in monthly payment.
• If you can use debt consolidation from the refi to lower overall monthly obligations.
• Using a cash-out refi for home improvements or some other major purchase.

One important thing to remember: Refinancing isn’t free. Homeowners should calculate their break-even point to see how long it would take to recoup the costs of refinancing, says Jared Maxwell, vice president of consumer direct lending at Embrace Home Loans.

“The break-even point on a mortgage refinance occurs when savings equals costs,” Maxwell says. “If your refinance costs $4,000 in lender, title and third-party closing costs, and you are saving $200 a month, your break-even point would be 20 months. Every month after that, you are saving money.

“The one thing consumers also need to consider is the impact of shortening or lengthening their mortgage term,” he adds. “If you have already paid down your mortgage by eight years and you are refinancing to a 30-year term to save money, you have to consider when you would like your mortgage to be paid off and whether you have a plan to pay additional principal each month.”

The bottom line

If there’s one thing that our experts agree on, it’s that the decision to refinance is a personal one that should be based on your individual situation.

With mortgage rates at all-time lows, millions of homeowners would benefit from refinancing their loans. And with many industry experts predicting rates to increase later in the year, homeowners should do research now to see if they’re among those who would benefit from refinancing. If the answer is year, be sure to compare offers from multiple lenders.