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There are a number of issues to consider if you are contemplating the refinancing of your mortgage. Refinancing gives you a chance to adjust the terms of your mortgage to suit your current financial needs as well as a chance to reduce your interest rate.

If you want to save on the overall finance charges you will pay, you should consider reducing the term of your loan from a 30 year fixed to a 15 year fixed rate mortgage. Your monthly payments will go up but you will build equity more quickly and pay a lot less interest. Be sure to consider the tax implications of having less interest to deduct.

Another popular reason to refinance is to eliminate an adjustable rate mortgage (ARM) with a high rate or with allowable unlimited rate increases. Converting to an ARM with better terms or to a fixedc rate loan could save you some money.

If your situation calls for immediate increased cash flow, you might think about refinancing to an ARM with low initial rates or to an interest only loan with a balloon payment. If you need additional capital as well, you usually can refinance a larger amount, up to eighty percent of the equity in your house, as part of the refinance to get some cash up front.

No matter the reason for your refinance, be sure that you get your loan rate guaranteed in writing so that it cannot increase before you close the deal. Failure to "lock in" your rate could cost you a considerable sum if rates take a steep climb. Most mortgage companies will place a limit on the amount of time they will lock in your rate. Make sure you get to closing before your guarantee runs out.