As the American economy continues its downward spiral, many homeowners are seeking to reduce their monthly expenses by looking for a lower refinance mortgage interest rate. For anyone struggling to make ends meet, this could be a viable option. You may want to consider the following factors, however, before you begin the process of refinancing your home.

Does Refinancing Right Now Make Financial Sense?

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?

The fact is that you must be eligible for this great low rate. Your mortgage payments must be current and you cannot have fallen past due for more than 30 days in any month from the previous twelve. The payment for your mortgage needs to be 31% of your monthly income or higher, and you need to prove your financial hardship. If your mortgage was written by either Freddie Mac or Fannie Mae, you are also eligible for refinancing at the 2% rate.

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.

Try putting your figures into an online mortgage payment calculator and this will give you a better idea if refinancing is worthwhile at the present time. You will need to know your current loan balance and interest rate, as well as the rate of your new mortgage. You will also have to input the term of both your current and future loans.

In order for this figure to be accurate, however, you will also have to know if you are going to be required to pay any extra fees or points. Even if you do not have this information yet, though, it will give you a good idea of whether or not the current refinance mortgage interest rate you’ve found will lower your monthly payment enough to be considered worthwhile.

Finding the Lowest Mortgage Refinance Interest Rate

In order to get the best rate for your home refinance, it is going to take some time. Although interest rates have tended to remain stable for the past few months, that is not guaranteed to continue. The best thing you can do is keep an eye on overnight changes daily and be ready for action when it reaches your preferred level.

The prevailing mortgage rates can fluctuate quite a bit. This is based more on supply and demand than it is on the prime rate. If demand is low, so will interest rates decrease, and vice versa.

In fact, the reverse could be true. A lower prime rate is used to stimulate the economy by inducing people to borrow at these cheaper rates. Sellers will, in turn, increase the prices of their products. When the resulting inflation cheapens the value of mortgage bonds, then the lender has to make up for it somewhere, usually in the interest rate.

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.