Looking at scenarios will make decision on refinancing clear

Q. Mortgage rates are at favorable levels. Is it time for me torefinance?

A. When interest rates fall, a homeowner should definitely call alender about refinancing, but he or she should discuss their entirefinancial situation and goals before making any final decision. Isyour goal to lower your monthly payment? Consolidate debts? Get cashout for large purchases? Change your interest deduction expense foryour taxes?

Ask your lender to provide a couple of refinancing scenarios foryou, showing how your loan term length, monthly payment and yourtotal interest expense on the loan will change. After looking atthese scenarios, it will be clear whether you should spend the moneyto refinance.

Q. How much would it cost me to refinance my current home loan?

A. In addition to an application fee (about $250 to $350), you mayhave to pay an origination fee (typically 1 percent of the loanamount). In many cases you will have to pay many of the same coststhat you had to pay with your current home loan (title search, titleinsurance, miscellaneous lender fees, etc.) because, in effect, youare getting a new mortgage.

The sum of these fees could be 2 percent to 3 percent of the loanamount. If don't have the money to pay for associated loan costs,look for lenders that offer "no-cost" loans. These loans have aslightly higher interest rate, so ask a lender if it would still makesense to refinance using this type of program.

Mortgage Market Information Service