I author a real estate Q & A in the Leader/Newspress which is published each Saturday in the real estate section.  In case you didn’t catch today’s column regarding refinancing at today’s low interest rates, here it is: 

Dear Phyllis, I try to catch your weekly column and appreciate your advice.  My mortgage loan is 6.5% and interest rates keep dropping.  How can I determine if I should refinance to obtain a lower interest rate?

Dear OS,

If refinancing to pull equity out for an investment or other purpose, today’s lower interest rates are likely the way to go. But if refinancing simply to lower your interest rate it is important to determine how long before you break-even.  Obviously, how long you will keep the loan plays a very important factor. There are a variety of factors which include how much money you will save from the new lower interest rate.  How much will you spend in fees (including escrow and title fees)?  Also, don’t forget to take into consideration that your mortgage likely doesn’t have 30 years remaining, you will be adding years of payments.  Check an online refinance break even calculator for help in determing these answers.

What is the interest rate? Is it fixed for 30 years? – (Ask for the interest rate on a 1 point loan… Compare all lenders on the same 1 point loan)

What additional fees are there? And how much are they?

Is there a (prepayment) penalty if I pay the loan off early?

When do you lock in (guarantee) the interest rate?

How long is the lock? And is that time period sufficient to close my loan? (A 21 day rate lock will not be of any value in a 45 day escrow OR if the lender can’t close your loan in 21 days).

What happens if interest rates decrease after I lock in my interest rate? Am I eligible for the lower interest rate?