Should I refinance my home?

It's a question homeowners ask year in and year out: Should I refinance my home mortgage or stick with the loan I currently have?

The answer depends on a number of factors. For that reason, it's a good idea to run through a list of questions that can help you evaluate your situation.

Here are some questions to consider:

• Can I lock in a fixed interest rate, lower interest rate or lower monthly payment? Locking in a fixed or lower interest rate or lower payment can be a good reason to refinance.
• Can I lower my total interest expense? Paying less total interest over the term of a new loan compared with the remaining term on an existing loan can be another good reason to refinance. Bankrate's refinance calculator can help you do the math.
• Do I have enough equity? If your home is worth more than you owe on your existing mortgage, you're in a much better position to refinance than if you have no equity.
• Is my credit score high enough? If you have a good history of making your mortgage payments and paying your other obligations on time, you're in a much better position to refinance than if you made some late payments or missed any payments.
• How much am I willing to pay in closing costs? It may not make sense to pay points and closing costs to refinance even if you could lower your interest rate, payment or total interest expense. But some lenders offer a no-cost option that lets you get the benefits of refinancing at a higher interest rate without paying any costs.

If you decide to refinance, give careful thought to whether you want a new 15-year or 30-year term. A 15-year mortgage generally offers a lower interest rate, but higher payment compared with a 30-year loan.

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