You should refinance your home mortgage when mortgage rates fall so that you can take advantage of lower rates. A lower interest rate will result in savings on your monthly payment that will last for the life of the mortgage.

On the Other: Costs of Refinancing

Refinancing has closing costs and points just like mortgages, which can make refinancing prohibitively expensive even though a drop in the interest rate may save you money on your monthly payment. In addition, you must pay the costs of the refinance up front and you will not realize the savings on the loan until many months have passed.

Bottom Line

You must carefully consider the closing costs associated with refinancing your home before you rush to refinance. You should ask potential lenders how much money you will save on your monthly payment by refinancing and how much refinancing will cost. Then divide the cost of the refinance by the monthly savings to determine how long it will take to recoup the costs. For example, if you would save $20 per month but the refinance would cost $1,000, it would take you 50 months, or just more than four years, for the savings to balance the cost of the refinance.

Source:

Bankrate.com: When Should You Refinance Your Mortgage Loan?; Don Taylor

Bankrate.com: Four Things to Know Before You Refinance