Should you refinance your mortgage?

30-year fixed-rate mortgages

With 30-year fixed-rate mortgages averaging below 4.25%, and possibly set to rise, should you refinance?

You should at least consider it, Amy Hoak writes in The Wall Street Journal -- if you have the necessary income, credit and home equity.

That is true even if you are a borrower who secured a 5% mortgage rate on a 30-year fixed-rate mortgage last year. Assuming a loan balance of $200,000, if you could refinance into a 4.25% mortgage today, the savings would be about $100 a month. It could take about 3½ years to recoup the costs of the refinance, but those who bought in 2009 presumably would plan on staying in the home long enough for the refi to pay off. 

If you're thinking about it, you need to consider a few things.

Find local rates and home values: Mortgage-interest-rate surveys such as Freddie Mac's give national averages each week, but market and lending factors will cause rates to be higher in some parts of the country and lower in others. Understand what the going rates are for your area.

In general, closing costs will typically be around 1.5% to 2% of the mortgage,, so assume they could add up to $4,000 for a $200,000 loan. Costs also vary by location. It is possible to find a "zero-cost" mortgage, but be aware that you will pay those costs in another way, either with a higher loan amount or a higher interest rate.