A prudent time to enter into the refinancing process is when you find the market rates are approximately two percent below your original mortgages locked in rate. This difference will yield a break even point, a period of about two to three years for most conventional, middle to high end, American mortgages.

Some innovative re-financiers may feel taking advantage of one and a half or even one and a quarter percent differences in the refinancing rate . If the principal on your loan is high, relative to the costs of refinancing, it may be well worth it to consider refinancing at one of these lower rates.

Another scenarios in which it's wise to refinance is if you currently hold an adjustable rate mortgage, and you've recently discovered that your long term income prospects aren't as you dreamed they would be.

You will not want your financial future to be dependant on a theoretical catastrophic ARM spike. Therefore, you can refinance to a fixed mortgage so that you can budget more effectively on your reduced income stream.

Keep in mind - you may want to build equity as quickly as possible in your house. You may also hope that you can own your home as quickly as possible, and be done with mortgage payments once and for all. Refinancing to a shorter mortgage loan term, will bring you to your goal much faster can, plus create equity in your home at a faster pace.

I suggest if you are going to go the refinancing route, make sure that you have a solid asset forecast. If you are going to take on a higher monthly payment, it's wise to work with a financial planner. A financial planner can help forecast how these increased monthly costs may impact your investment portfolio and lead to a better quality of living.

Do you hold a balloon mortgage? If so you may not want to face the upcoming consequences of a spiking payment. Can you afford the mortgages payment when it balloons?

In the case of the balloon mortgage, for instance, you may consider refinancing your mortgages before the larger payments come due and pass the debt down to your future self. By creating this time cushion, you can provide yourself a window of safety to generate more income and asset streams in the anticipation of your upcoming refinanced mortgage payments.