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Investors and home owners both watch as interest rates fall. Home owners know about their interest rates, closing costs, mortgage payments, and the other expenses they’ve had to deal with to get their mortgage. When interest rates are falling because of the current market’s conditions, everyone has to compare the pluses and minuses of how those interest rates affect their mortgage refinance opportunities.

Declining interest rates may be surrounded by sluggish economic conditions, and that is certainly cause for concern, especially considering the resultant uncertainty of both employment security and returns on market investments. When refinancing mortgages, though, it must be determined whether the initial capital outlay required for the refinance will outweigh the interim advantages of monthly savings that result from lower mortgage payments. If the expenses do not exceed the benefits, then it is certainly advisable to study the matter more thoroughly, in order to determine if a refinance will increase cash flow for you by reducing your mortgage payments, and thereby free-up additional disposable income.

Many financial institutions recommend, as a general rule of thumb, that if interest rates fall 2 or more percentage points below your existing home mortgage, it is worth researching further and consider mortgage refinance. However, this is not recommended and readers are encouraged to see that more as a financial urban myth of the days of old. Today, there are many different types of mortgage refinance loans; middle income families have much more complex investment portfolios today, and have become financially savvy by being creative and juggling a number of different types of loans and cash-producing investments, both short term and long term. Also, unfortunately, many have become victim to credit card lending and practices that have escalated interest expense for an average of 8-10% for decades now.

Here are some questions to ask yourself when you are looking at refinancing a home loan:
1. What is the Current Interest Rate?
2. What is the Interest Rate of Your Mortgage?
3. How Long is Left on Your Existing Mortgage?
4. How Long Will You Keep Your New Mortgage?
5. Will Different Banks Compete and Give You Lower Closing Costs?
6. Does Your Current Mortgage Have A Penalty for Prepayment?

It is important to consider very carefully the basic concepts of home mortgage refinance. You may even want to make notes for yourself to ensure you have a clear understanding of the effect refinancing will have on your mortgage. Will the monthly savings produce any extra cash, for example? When you have reached this point, it would also be useful to run a few hypothetical financial computations with an online financial or mortgage calculator. Speaking about refinancing with a loan officer would be beneficial, as well.

NB: Unusually severe currency value fluctuations can have a positive or negative effect on the outcome of your calculations. If this is known to be occurring or expected to occur, you should allow for this factor when calculating profit or loss from your mortgage refinance.