6 questions to ask before a refinance
What are the terms of my current loan?
Borrowers with adjustable-rate mortgages or interest-only loans should consider the potential benefit of switching to a fixed-rate loan. Hsieh says all borrowers with ARMs should switch to a fixed-rate loan unless they intend to move within one year.
However, Cunningham says some borrowers can benefit by sticking with their current ARM.
"Consumers with a subprime ARM should definitely switch to a new loan," Cunningham says. "But some with conventional ARMs may find that they are in a good loan and that their rates are actually dropping."
While new loans today rarely have a prepayment penalty, many homeowners still have loans with that restriction, which could reduce the financial gain of a refinance, Meshel says.