Refinancing should be a dollars and sense decision. Following are some tips to help you decide if it makes sense for you.

Calculate The Monthly Savings: To do this you will need to know two things:

1. What your current principal and interest payment is. This is your payment less any money escrowed for taxes and insurance. The P&I should be shown on the monthly statement you receive or on the note you signed at closing. Let’s assume for demonstration purposes your P&I is $1200.
2. The balance of your current mortgage. This should be shown on your monthly statement or can be determined by calling your current loan servicer.

Step two is to determine what your new payment will be. Click here to use our online calculator to determine your new payment.

By subtracting the new principal and interest payment from your current principal and interest payment you can determine your monthly savings.

Other Factors To Consider:

1. Instead of lowering your payment, you could keep the same payment but shorten the term. For instance, refinance to a 15 or 20 year mortgage and keep the same payment.
2. Keep the same payment, but take cash out. If you have sufficient equity in your home you could keep the same payment, but raise the loan amount and use the cash for investments, a second home, home improvements etc.
3. Consider a "No Cost" refinance. Lenders can pay your closing costs by bumping up the interest rate on your new loan, usually .5% to .625%. If you are going to be in your home less than 5 years, consider this option.

Tip: Weigh all of your options before deciding to refinance.