Several factors will determine if refinancing is something from which you'll benefit. How long you expect to own your home may ultimately be what determines whether or not refinancing makes sense. The long-term savings of refinancing to a lower rate or reduced loan term are often undeniable.

However, sometimes there are costs associated with refinancing that may take time to recoup before your savings kick in. That's why it's so important to analyze refinance offers to determine the breakeven point, potential costs, taxes and true savings.

How do I refinance my mortgage?

A mortgage refinance is essentially a new mortgage loan. In order to refinance, you'll need to apply with a licensed mortgage lender the same way you would if you were purchasing a home. Utilizing a refinance calculator and obtaining quotes from multiple lenders will give you an opportunity to maximize the benefits of refinancing.

What is a streamline refinance?

In some circumstances, you may be able to refinance without jumping through the normal hoops associated with obtaining a traditional mortgage or refinance.

FHA Streamline Refinance

If your current mortgage loan is an FHA loan, refinancing to another FHA loan may provide the easiest path to lower monthly mortgage payments. A streamline refinance typically does not require a new home appraisal or income verification.

There are restrictions to FHA streamlines, but if you meet them, they are a great way to expedite the mortgage refinancing process.

VA Interest Rate Reduction Refinance Loan

If you already have a VA loan, you are well aware of the tremendous value of buying a home with a VA loan. The VA Interest Rate Reduction Refinance Loan is an extension of those benefits and a fantastic way to immediately lower your monthly payment with minimal paperwork, including no appraisal or income documentation.

Like all refinances, the new loan should provide a tangible net benefit to the homeowner. Your VA loan payment must decrease by enough to offset any costs associated with refinancing.

HARP

The Home Affordable Refinance Program or HARP loans were introduced after the housing crisis of the mid/late-2000s. Unfortunately, that program has expired.

As with all mortgage loans, terms and qualifications may vary from lender to lender. Please consult a mortgage lender for the most up to date streamline refinance information.

What are the costs associated with refinancing?

If you're using a mortgage refinance calculator to explore your options for lowering your monthly payment, you should know that there are a variety of costs associated with refinancing. A refinance won't be right for everyone and sometimes it's better to stick with your original loan, so it's important to crunch the numbers and weigh your options carefully.

Here are a few of the costs you might expect:

Application Fee

Some lenders will require an application fee regardless of whether or not your application is approved

Loan Origination Fees

Origination fees are what your lender charges to process your loan. This includes the cost of underwriting which is a part of the approval process to determine a borrower's ability to repay a loan based on a credit check, minimum credit score requirements and other key indicators. These fees are typically 0.5% to 1.5% of your total loan amount.

Appraisal Fee

Appraisals are usually a requirement for mortgage refinancing. For your appraisal, a 3rd party will be hired to come out to your property and estimate the worth of your home. Appraisals typically cost between $300 to $600.

Title Insurance

Even if you purchased title insurance when you bought your home, it's likely that your lender will want another title insurance policy in the event that you refinance.

What are today's refinance rates?

Mortgage rates are determined by the market for mortgage bonds. Rates change daily and can even update throughout the day as market conditions fluctuate, so "current rates" don't stay current for very long. Each mortgage lender determines what rates they offer. Therefore, rates vary from lender to lender, and one lender's FHA or VA rate may be higher or lower than another's.