With the ultra-low interest rates right now a lot of people are wondering if they should refinance their home. It can make a lot of sense for anyone planning to stay in their home more than 3 years – but every case is different and there are no hard rules. It is important to take into account the specifics of your situation.
Some people don’t have the money to refinance. One option is to “buy up” the interest rate for discount points, which would mean you would have a higher than market rate interest rate but the higher rate would be used to offset your closing costs, meaning you would need to bring very little if any money to closing. The increased interest rate will be with you for the life of the loan but if it is the only way you can refinance, something is better than nothing. The higher interest rate will cost you more overall after around 2 years but before then you are actually money ahead.
A lot of people are “under water” or “upside down” on their mortgages – there are numerous government programs that may be able to help them refinance and their lender may be willing to provide some options too.