As the American economy continues its downward spiral, many homeowners are seeking to reduce their monthly expenses by looking for a lower refinance mortgage interest rate. For anyone struggling to make ends meet, this could be a viable option. You may want to consider the following factors, however, before you begin the process of refinancing your home.

Does it Make Sense to Refinance Right Now?

A lot of Americans are excited since President Obama passed his “Making Home Affordable” plan as part of the economic stimulus package. The requirement that lending institutions offer a 2% interest rate to those hit hardest by the failing economy and a loss of income is indeed something to get excited about. But do you qualify for it?

There are some requirements to qualify for this plan. These include a mortgage payment that is at least 31% of your monthly income, your loan status being current and never more than 30 days past due anytime in the prior twelve months, and the ability to submit a financial hardship statement. If you financed your home with Fannie Mae or Freddie Mac, you are also eligible for Making Home Affordable.

If none of the above applies to you, then you must refinance at the prevailing rate offered by the lender. Sometimes the difference is not great enough to make good financial sense. Consider finding an online mortgage payment calculator as a way to help you decide.

There are many websites that offer this nifty little tool. You merely plug in the remaining balance of your mortgage loan, add your current rate of interest as well as the new interest rate, and the length of the loan, and it will come back with a monthly payment figure.

Remember that the payment amount returned by these calculators is just an estimate. Unless you know the points and any additional fees you will have to pay to refinance, it is merely going to give you the principal and interest amount.

Waiting and Watching for the Best Mortgage Refinance Interest Rate

In order to get the best rate for your home refinance, it is going to take some time. Although interest rates have tended to remain stable for the past few months, that is not guaranteed to continue. The best thing you can do is keep an eye on overnight changes daily and be ready for action when it reaches your preferred level.

Prevailing mortgage interest rates are based on a number of factors. One of them is supply and demand. If demand is high, the rate will go up, and vice versa. A cut in the Federal Reserve’s prime rate will not necessarily mean that mortgage rates will also be cut.

In fact, the reverse could be true. A lower prime rate is used to stimulate the economy by inducing people to borrow at these cheaper rates. Sellers will, in turn, increase the prices of their products. When the resulting inflation cheapens the value of mortgage bonds, then the lender has to make up for it somewhere, usually in the interest rate.

There is a lot to be aware of when seeking the lowest possible refinance mortgage interest rate. Most homeowners do not have the time or skill to do so. You may prefer to work with a reputable company that can find the best loan product for you, and let you know as soon as the interest rate becomes low enough to make refinancing worthwhile.