How do I know when it's a good idea to refinance?
You need to consider the cost of refinancing, such as application fees and closing costs even prepayment penalties compared to the savings in reducing your rate and monthly payment; and balance those with how long you will be in your present homw. You may also want to consider refinancing if you have an adjustable-rate mortgage (ARM), you may want to refinance to a fixed-rate loan if you fear that rates will rise, or if you want the security of knowing exactly how much your future payments will be.