If you're dazzled by new low interest rates and dream of reducing your monthly mortgage payments, if you foresee a major expense, or if you simply want to pay down credit card debts with a better interest rate, you might just get what you wish for. In matters of real estate, there's rarely a quick and easy formula for all, but the profiles below will help you pinpoint your refinancing options. Some of the primary reasons for refinancing are to lower monthly payments, pay off a loan or build equity faster, convert an adjustable rate mortgage (ARM) into a fixed-rate mortgage, or change other loan terms. If you can refinance today with a "no-cost" loan at a lower interest rate—meaning you pay no points or closing costs, and the interest rate is actually lower than your current rate—run, don't walk, to your lender's office. But this golden scenario rarely applies. As a next step, ask yourself these three questions, and see why they're so important. How long do you plan to stay in your house?

The most important question you can ask when considering refinancing is: Will you be in your home long enough to reap the benefits despite its costs? If you plan to be in your home three years or less, you probably have little or nothing to gain by refinancing except a hassel of paperwork. However, if you know you'll be in your current house five years or more, refinancing could make for substantial savings. What will a refinance cost you in points, transaction fees, and other closing costs?

Ask your lender for an amortization chart showing the real expense of pre-paying interest points and for a modified Annual Percentage Rate (APR) spread sheet combining these costs over the years you estimate keeping your home. If you're considering a no-points loan, weigh carefully the additional interest and other fees that may be hidden in higher mortgage rates. How long have you held your current mortgage?

If you're on the "back end" of a fixed-rate loan—meaning you've already taken advantage of most of your tax-deductible interest—taking out a new loan could be beneficial, since you can deduct the interest and prorated points year by year. Potential disadvantages of refinancing.

Unlike a first mortgage, tax deductions for points are amortized over the life of the loan, not all together in the year you pay them. (If you sell your house or re finance again in the future, the remainder of the interest you prepaid in points will be deductible in that year.) If your existing loan agreement includes a prepayment penalty clause, it could negate the benefits of refinancing, since by refinancing you're paying off your current loan to open a new one. The term of your loan could begin anew from your refinance date. Always look before you leap, and work with a knowledgeable mortgage representive, like myself, Jim Pendleton, having over 20 years experience in the financing world. God's blessings are for those who are watching and waiting for them. Maranatha!!