A mortgage refinance is a great way of taking advantage of historically low interest rates and changing your payment terms to make them more affordable.

Refinance your mortgage now, with interest rates at historic lows. You’ll want the best deal if you plan to refinance your mortgage in winter.

How can you can make sure that your mortgage works for YOU and not the other? Here are the facts.

What Is Your Break-Even Point

The break-even point refers to the point where the difference between the extra amount that you paid out of pocket and the amount that you save by paying a lower interest rate is equal. It’s also the point when refinances actually start saving you money.

For example, if you pay $5,000 in refinancing fees, and your refinance lowers your monthly interest payments by $200, you will break even after 2 years and 1 month.

Select a shorter loan term, if possible

Refinance allows you to convert a long-term mortgage into a shorter one. A shorter mortgage will have higher monthly payments but more is paid to the principal. For example, a 30-year mortgage will have you paying mainly interest for the first 16 year. However, a 15-year mortgage will see your monthly payments go towards the principal of the loan after five years.

Avoid Prepayment Penalties

Prepayment penalties are a penalty you pay to get your mortgage paid off early. A prepayment penalty can be applied to you if you have a sudden income and are able to pay your mortgage off in one lump sum or if your home is sold.

These penalties are not applicable to all mortgages. Talk with your mortgage professional about whether you want a mortgage without prepayment penalties.

Get a Discount on Your Rate

The historical lows in mortgage rates right now are a sign of things to come. Refinances are a great way to lower your interest rates. This is why you should choose a fixed-rate mortgage if you intend to refinance your home.

You won’t have to pay more interest because it will keep your monthly payments manageable and low.

Find Your Home’s Fair Market Value

The price of housing can fluctuate over time. This could impact the rate you pay when you refinance. Higher-value properties generally receive better rates. Make sure to know the fair market value of your home.