If you are like many Americans, you may have thought it is time to contact your lender to see if you qualify for a lower refinance mortgage interest rate. This is a great way to reduce the amount of your monthly expenses. Before you get any further into the process, though, you may want to review this information about finding the best interest rate.

Is a Refinance Right Now Worthwhile?

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.

But if you are one of the thousands of Americans to whom these conditions do not apply, then you will not receive that low 2% interest rate by refinancing. In fact, it may not make sense for you to change the terms of your mortgage right now.

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.

Plan to Find the Lowest Mortgage Refinance Interest Rate

If you are determined to wait until the best interest rate is being offered by your lender, you will have to exhibit some patience and keep a daily watch on overnight mortgage rate changes. The rate has remained stable in recent months, but that is bound to change at any time. You must be prepared to start the paperwork when the rate hits your target low.

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.

Consider the Federal Reserve’s role in changing the mortgage interest rate. The prime rate is often lowered in order to stimulate a sluggish economy. The expectation is that borrowing, and spending, will increase. Vendors know that this is the time to raise the prices on goods. As inflation occurs, mortgage bond values decrease. Mortgage lenders, then, raise their rates to cover the loss.

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.

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