Being careful when refinancing a mortgage can save a lot of headaches down the road

• Homeowners anxious to lower their mortgage interest rates are refinancing in record numbers, according to industry experts.
• If you are considering refinancing, the Better Business Bureau suggests you shop around, compare prices and negotiate.
• But also move with caution when dealing with some lenders.
• When you refinance your home, you simply apply for a new mortgage at the lower rate in order to pay off the old loan.
• This means that, for many lenders, you will again be required to pay most of the costs you originally incurred to get your first mortgage - loan application fees, title search, appraisal, credit check, lawyer's services, discount points (in many cases) and other finance charges.
• But, many institutions offer plans where most of these fees are folded into the loan, reducing your actual "out of pocket" cash to a minimum.
• Most consumers are able to take a tax deduction on the interest.
• Before you go through the expense of refinancing, check the interest rates to make sure they have dropped to a level that makes refinancing worthwhile.
• Conventional wisdom states that a two or three percent difference between the rate on your current mortgage and the new rate over a period of time - generally several years - usually offsets the costs you must pay at closing.
• The ultimate amount you may save depends on many factors, including your total refinancing, whether you sell your home in the near future and the effects of refinancing on your tax situation.
• Remember, you do not have to refinance your mortgage with the same lender that provided your original mortgage.
• Also, be cautious of smooth-talking lenders that call you on the phone or come to your door offering easy credit, guaranteed low-interest loans or loan terms that sounds too good to be true.