You’re finally doing really well and you have paid on your home mortgage steadily and on time since you first began paying on it. You have great credit and quite a bit of equity built up in your home. Now the interest rates have dropped to a pretty good level and you want to refinance. Well this can save you a lot of money over time if you do it right.

There are two good times to refinance your mortgage. If you have an adjustable rate mortgage the best time is during the rising periods of the interest rates. When you refinance to a fixed rate type mortgage especially when it is close to your current interest rate you can avoid those high costs when they begin to rise. The second best time to refinance your home mortgage is when you know you will save money by getting yourself a lower interest rate.

If you’re beginning to have financial difficulties you may feel that it will benefit you by lowering your monthly payments and extend the time of your home loan. To be honest this is not the time to refinance especially from a savings aspect. The only way this plan would benefit you is if you get a lower interest rate on the new home loan. Outside of this you’re really not saving any money. In truth this could negatively affect your financial situation. The reason for this is because you are not actually saving money you are just adding extra that you have to pay by increasing the months due for a mortgage payment.

You need to stop and consider that even if the new mortgage rate will be just a bit lower than the original the only way it is of any benefit is if your overall savings are greater than the overall refinancing costs during your ownership of the home.