There are obviously a variety of reasons and ways to refinance but the beginning of the year is a great time to start thinking about it, especially after spending more money than you should have during the holidays.

Mortgage rates are comparatively low and the housing market has seen better days, so you should consider how much longer you plan on staying at your current residence and if it is longer than five years, you will probably greatly benefit from refinancing.

The article, “Housing Counsel: It's Time to Refinance Again," written January 8, 2007 by Benny L. Kass and posted on Realty Times explains what to consider before refinancing and how much it can benefit you.

Before jumping into any refinancing it is important to remember that the process and obligations are just like when you signed on the original mortgage. With that being said, make sure you understand all the terms and stipulations.

Now before beginning the refinancing process, analyze the interest rate that you would be able to potentially qualify for. You should shop carefully for interest rates.

“We all predicted that interest rates would be as high as 7 percent by the end of the year -- and thankfully we were wrong. But who knows what next year will bring, and if you can save a little more than one full percent by refinancing, that might make sense."

So, the interest rate is low enough, now you have to contact a lender and find out what the closing costs will be.

“Consumers often do not understand that the lender -- whether it is your current lender or a new one -- will want a brand new title search, may want a new survey (especially if you made major improvements and added to your existing house, and you will have to pay for a new lender's title insurance policy). You should insist on obtaining what is known as a ‘reissue rate’ so that you will not have to pay the full cost of this insurance."

Make a spreadsheet of all your new financial expenses create an amortization table to determine what your new monthly mortgage payment will be if you refinance. You can obtain a sample table or worksheet from a variety of Internet sources, just type in “amortization table" into a search engine.

For example:

“Your current loan is approximately $200,000.00, and is at an interest rate of 7-1/2 percent. Your monthly payment of principal and interest (not including taxes and insurance) is $1,398.43."

“If you obtain a new loan in the same amount at 6.25 percent, your new monthly payment of principal and interest will be $1,231.44, for a monthly savings of $166.99 or $2003.88 on a yearly basis."

And, since the majority of your monthly payments will go towards the interest for the first few years, you will have greater initial tax deductions from refinancing.

Many things in real estate are uncertain and subject to change within a day or two, so you may want to refinance as soon as possible while interest rates are still low to save the most possible money.