Selecting a refinancing option that is right for you requires a lot of consideration. Before you settle for a specific refinance option, there are some basic questions that you need to ask yourself such as interest rates, points, costs, terms and your financial objectives. A first question should be why refinancing? Well, by refinancing you could adjust your loan so that you are not paying very high rates of interest on your mortgage. This is always a good sign. Another major point that you want to consider when refinancing is whether to pay points or not. A point is typically 1 per cent of the total mortgage loan. Points paid on a loan you've refinanced can be deducted from your taxes in small increments.

If you're buying a home, points paid are a tax-deductible expense for that year. Please consult your tax advisor. If you pay higher points initially it would result in lower interest rates over the life of the loan. You also have two basic choices to make in terms on whether you plan to go in for a fixed rate or an ARM loan in refinancing. A fixed rate loan ensures that interest rate of the loan remains the same over the period of the loan. In an ARM loan, the interest rate fluctuates, generally with the fluctuations of the Prime rate or other indexes. Here, some times the rates may be really low but at other times they may be high. It is also always a good idea to keep in mind that home equity loan or a line of credit could be a good way to refinance. If you choose to go in for either of these, it could open up more refinancing programs for you to choose from. 

The program you decide to go in should be decided by the goal of refinancing. Is it to shorten the pay off? or, Is it to get more money for remodeling or major renovations? Refinancing usually takes two to four weeks. If you plan to go in for this, you need to make sure that you have the following documents ready before you go in to any financial institution: Proof of income, usually for the last 30 days, copy of home owners insurance, copies of W-2 forms, copies of asset information and copy of title insurance. A general guideline in refinancing is that you will need to pay two percent of the home's purchase price for prepaid interest to cover the time between the date you close your loan and the date you make your first mortgage payment. Usually, the old mortgage will have enough money in an escrow account that can cover this cost. Refinancing on any home usually takes between two to four weeks. The time frame depends on whether the home was appraised recently, whether appraised can be found in the area quickly, whether there are other comparable homes in the neighborhood. As interest rates have been raised by the Federal Reserves several times since 2004 and the raise is expected to continue, refinancing may be a wise decision.