What are my financial goals?
Many homeowners refinance to lower their monthly payments. A mortgage calculator can give borrowers a sense of what their new payment would be after a refi.
Others choose a shorter-term loan with higher monthly payments so they can reduce overall interest payments and own their homes faster.
"Some people are restructuring their loans to a 20-, 15- or 10-year mortgage, which works well for people with plenty of disposable income," Cunningham says. "But I worry that people are too focused on paying off their mortgage and not integrating this decision with their overall financial plan."
Cunningham urges borrowers to make sure they contribute to retirement savings and college savings, pay off high-interest debt, and save six to 12 months' of expenses "before opting for a shorter, more expensive mortgage."
Meshel says people should consider whether they want to retire without a mortgage before opting for a new 30-year loan. Those who have employment concerns may want to refinance into the lowest possible payment in case they experience a job loss.