When it comes to refinancing, some people hesitate long enough to ask themselves if it the smartest choice to refinance home mortgage interest rates at all.  Knowing the answer to this question is no simple thing; since there are many considerations to think about.  Not only do the current mortgage interest rates affect the decision, but also important are the individual's financial situation and the equity that has been built onto the home.  Not only that, but deciding which type of refinance mortgage loan to choose is a tough choice. Because there are so many considerations to think about, the borrower should know when the right time to refinance home mortgage interest rates is. 

A rule of thumb that mortgage companies use to urge borrowers to refinance is if the refinance mortgage interest rates are at least 2% lower than what they are paying now on their mortgage loan.  If it is, the borrower might be able to save money by refinancing.  However, even if money can be saved on the loan itself, the borrower should take note of any costs on refinancing that might exceed the savings on the refinance mortgage rates. 

Another consideration a person should think about when deciding to refinance or not, is how long the person will stay in their home.  Sometimes when someone is planning on leaving within the next couple of years, it might not benefit them to refinance.  However, an exception is if the person is deciding to refinance between a fixed rate to adjustable rate mortgage or vise versa.  In times of high interest rates, it might save a person some money to temporarily refinance to a lower mortgage interest rate.  It takes nearly four years to benefit from the savings associated with refinancing a mortgage loan.  If someone is planning on moving soon they may not want to refinance the mortgage unless there is some compelling reason to do so.  Again, there are exceptions, but they should be discussed with a mortgage company. There are other compelling reasons to refinance a mortgage loan.  In situations that someone needs some quick cash; they can use a "cash out" mortgage refinance to pull equity out of their home for improvements or other expenses.  Or someone may have a risky option or interest only mortgage loan and would like to refinance to a safer fixed rate mortgage.

For those homeowners wanting to build equity in their homes at a faster rate, refinancing to a mortgage loan with a shorter term is probably the best choice.  One thing to note; the monthly payment will go up. However, the person will pay more to the principal loan balance and less to interest each month.  This is important if someone plans on using the equity in their home later on for things like paying for a child's college tuition.