Anyone who bought their home using a fixed-rate mortgage probably knows that the market has its ups and downs, whereas they’re not expected to pay anything but their original, fixed mortgage rate. If the interest rate goes up at a given time, you know you’ve been wise since your rate remains lower. There are a lot more things to think about such as the pros and cons of refinancing, though, if the market rate decreases.

First, keep in mind the percentage point break. How much lower is the current interest rate than what you’re paying on your current mortgage? Despite what may seem like an attractively lower rate, the general rule is you should only consider refinancing when your mortgage rate is at least one full percentage point higher than current market rates.

Next, take a look at what your lender would charge you in transactions fees. These are the fees you will be charged to actually go through with the refinance in the first place. If the fees are high enough, you may lose all or most of the benefit you would have gained in refinancing anyway. It is definitely something to take into consideration.

It is also important to note what your lender plans to charge you in transactions fees. You accrue these fees when you choose to refinance. You may lose all or most of the benefit you would have gained in refinancing anyway, if the fees are high enough. Definitely take this into consideration before refinancing. You may be rejected, so keep this in mind, as well. When more than half of Americans are looking to refinance right now, it’s not that uncommon. Well beyond half of refinancing options were not approved in the first half of 2008 alone.

Another factor to consider logically follows. Certain criteria need to be met before you can refinance in the first place. In order to get the best refinance rates, you need to have a strong credit score. Even a strong score like 720 might not get you the rate you’re looking for in the refinancing process. You’ll probably need a 740 or higher if you want to maximize on a low rate.

Lastly, shop around. A rate quoted to you by one lender may not be your best option. The only way to know is to visit many lenders and do your research. This will take some time on your part, but it is ultimately the best way to net yourself the lowest rate possible. This is what you were seeking in the first place, so it will undoubtedly be worth the effort.

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