Tips to consider before refinancing your home

January 12, 2010 12:00:00 AM PST
All the buzz about home refinancing has died down a bit, but this could still be a good time for you to look for a cheaper mortgage.

Fixed mortgage rates remain near historic lows. But that doesn't mean everyone should refinance. In fact, with the tighter credit restrictions, many may not qualify.

"To get a lender's best rates you'll need at least a 700, 720. To refinance it all you'll need at least a 600," said Kellie Grant of Good Housekeeping.

Good Housekeeping says it's worth refinancing if you can reduce your interest rates by at least half a point. But there's a catch.

"You want to be sure that the costs that you lay out to pay for the refinance are recouped in a time frame such that you'll be in the home long enough to enjoy the lower monthly payment and more savings," said Bank of America VP Mark Wenitzky.

If you currently have a variable rate, consider refinancing into a fixed rate loan.

"Interest rates are expected to go up, and go up quickly. So by locking into a fixed rate loan now you're going to be seeing great deals that are going to hold you through until you do decide to sell your home," said Grant.

"The rates that we could get today are going to be better than what we're likely to get two to three years from now," said homeowners Alan and Lisa Treitman.

If you plan to sell your home within two years, it's probably not a good idea to refinance.