With Mortgage Rates So Low, Is Now the Time to Refinance Your Home Loan?

Because more private investors are coming to the market with better prices for securities containing lower-rate mortgages, borrowers may find it cheaper to refinance, because brokers will cut origination fees, she added.

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Deciding whether you should refinance is an important decision. Hobson said borrowers should determine their break-even point: Take your closing costs and divide it by the projected savings in monthly mortgage. The result will represent the number of months you will need to remain in your home in order for the refinancing to make sense.

For example, if your closing costs are $4,000 and you save $200 a month by refinancing, then you will need to stay in your house for at least 20 months. There are numerous calculators on the Internet -- including on websites such as bankrate.com-- to help you to do the calculation.

Shop around for the best mortgage rates and closing costs, as rates can vary from lender to lender. A great resource for quotes is LendingTree.com.

Check your credit report before you apply for a mortgage or try to refinance. This way you can correct any errors that could get you an unfavorable rate, costing you thousands in the long run. Bear in mind that numerous inquiries by mortgage brokers will only minimally affect your credit score, so this should not stop you from shopping around. Multiple inquiries made within a 45-day period are only considered as one inquiry, Hobson said.

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