Financial experts agree that if interest rates drop substantially from what they were when you obtained your original mortgage, it might be worth your while to consider refinancing it. You can lower your monthly mortgage payment, and, if you are a smart consumer, take the money you are saving and invest it for the future.

When you refinance, you usually have to pay closing costs and other fees because you are applying for a new mortgage. Sometimes those costs can be reduced or some of them even eliminated if you refinance with the same bank or lending institution that is holding your original loan.

If you have decided to refinance your mortgage, keep these tips in mind and the process will go a lot smoother:

• Ask your bank about refinancing your mortgage. See what they offer, and don't be afraid to ask them to eliminate or reduce any closing costs they are charging.



• Think about refinancing to a 15-year mortgage instead of a 30-year one. You may only have to pay a few dollars more every month for a 15-year loan than you would for a 30-year loan, but you will end up saving thousands of dollars over the life of your mortgage.



• Be careful if you are refinancing to an adjustable rate mortgage (ARM). Sometimes the rate will be very low for the first few years, then your payments will increase as interest rates rise. If you are interested in an ARM, find a bank that won't increase interest rates more than 2 points in one year, or 5 points over the life of the loan.



• Shop around for the best rates and plans available. Take time to compare refinancing plans carefully, and ask questions if you don't understand something.

Refinancing your mortgage may be right for you. But don't rush out and sign up with the first lender without first comparing and understanding all of their terms. After all, it's your money; you've earned it, and you've earned the right to spend it wisely.

See also: Managing Debt, Home Equity Loans, and Lowering Your Taxes