Should I Refinance Now?

Several of my clients have asked me if this is the right time to refinance their homes, now that interest rates are approaching an all time low.
Refinancing often requires fees for title insurance, a new appraisal, document processing, and a fee for the mortgage broker or lender. While it may appear the refinance is free, the costs often are added to the total loan amount or the borrower is charged a higher rate. Because there are fees typically associated with a refinance, many financial industry specialists recommend borrowers not refinance unless they plan to occupy the house for at least two years. Although there will be a reduction in the monthly payment, it can take a few years to break even on the refinance.
Remember, loan options are more limited today than a few years ago. Generally, the best rates are offered on traditional loans, such as 15-year and 30-year, fixed-rate mortgages, and loans for borrowers with at least 20 percent for a down payment for buyers or existing home equity for those seeking to refinance.
Some subprime loans made during the boom carry prepayment penalties–a fee or percentage the homeowner pays the lender in the event the mortgage is paid early, but lenders may waive prepayment penalties and allow the borrower to refinance with another lender if doing so prevents foreclosure.