Record low mortgage interest rates drive demand to refinance

If you want to repay your loan by a certain date — say, when you retire — bear in mind that you can simply prepay your existing loan. Prepayments are optional, so you have some flexibility

in your monthly payments, which you wouldn't have if you locked into a 15-year mortgage. If you're simply aiming for a lower rate, be aware that taking out a whole new mortgage can

eventually wipe out any savings you make by refinancing. If you have paid off 15 years of a 30-year loan, for example, taking out a new 30-year loan at a lower rate could mean that you

ultimately spend more money than you would have otherwise. HOW TO CUT REFINANCING COSTS If you do refinance, you have multiple costs associated with the new loan, from the aforementioned

discount points to state property taxes, insurance and appraisals. You can get a good sense of costs by digging out your original loan papers from when you bought the house, Gumbinger says.

Closing costs vary widely from state to state, but fees are typically about 3 to 4 percent of the loan amount. You can pay those out of pocket or roll them into the new loan. Then, you have

to decide if the refinance is worthwhile. Let's say you have a $200,000 mortgage at 4.41 percent, and your bank will give you a new mortgage at 3.29 percent. As noted before, your

monthly savings from the refinance would be $128 a month. If you pay 3 percent total refinancing fees, you'd pay 3 percent of the $200,000 loan, or $6,000. In order to make the

refinance worthwhile, you'd need to stay in your home about four years to recoup your costs. If the rate difference between your old loan and your new one is smaller, it will take

longer to get back your closing costs. Similarly, you can recoup your closing costs more quickly if you reduce them as much as possible. One way is to go with a loan with no points. You may

not get a 3.29 percent rate and the bragging rights that come with it, but you'll save some money up front. You can also shop around for lower inspection fees and title insurance. If

you're feeling overwhelmed, plenty of mortgage calculators online can help you make your decision. Search “mortgage refinance calculator” and you'll find calculators from Bankrate,

Nerdwallet, HSH, Smartasset and others. Mortgage rates have been low for the past five years, so the rush to refinance may be brief. The highest rate since March 2015 has been 4.94 percent,

according to Freddie Mac. Nevertheless, if you can refinance and put some extra money into your pocket -— or your savings account — it could be a good deal. According to Bankrate.com, 77

percent of Americans say the biggest barrier to saving for retirement is making the mortgage payment. “Here's the opportunity to ease that a bit,” McBride says.