A Primer on Refinancing?

[ejchase]

Hi All,

I bought a home about a year ago and am thinking about refinancing while interest rates are low. The first time I bought a house (back in 2001, in another state), I had all this time off from work, a fantastically patient real estate agent, and a copy of Homebuying for Dummies, all of which allowed me to kind of actually understand the process. Last year when I bought, I was seven months pregnant and had a real estate agent who was not very patient with my questions, so I kind of went through the process on automatic pilot which was was probably pretty stupid. Now that I'm thinking about refinancing, I'm at a loss as to how to figure out the following:

a. How much of an interest rate drop would make it "worth it" for me to do the refi? Our current rate is 4.75%, and we put 20% down. The quotes I've gotten have been for around 3.9%.

b. What other factors should I be considering as I make this decision and why? We plan to be in this house for at least 10 years, and we are broke, so a lower payment would be great.

If anybody here can give me answers to these questions - or can connect me to a resource that can - that would be great. Homebuying for Dummies doesn't have much info on refinancing.

Many thanks in advance,
Elizabeth

[puglogic]

Our lender has a section on refinancing on their web site, with a calculator for refinancing (what if scenarios). You might check that option. They (wells fargo) were very up-front when we wanted to refinance, and told us outright the interest rate that would make it a good deal. As for factors, I personally would avoid anything but fixed-rate loans. No balloon payments, none of that interest-only cr@p. Investigate fees, and what it will add to your loan balance if you wrap the fees into the mortgage. This is a good page: http://www.bankrate.com/refinance.aspx See the Mortgage Refinance Break-Even link....maybe something there?