Is it too late to refinance?

Pshaw.

The question could be "Is it too early to refinance?" given the continued slide in interest rates. In Freddie Mac's Primary Mortgage Market Survey, the 30-year fixed-rate mortgage (FRM) averaged 6.05 percent, with an average 0.7 point, for the week ending September 20, 2002. This is the lowest the 30-year FRM has been since Freddie Mac began tracking it in 1971.

On Sept. 24 Bankrate.com put the fixed rate even lower -- at 5.76 percent.

"Is it too late to refinance? I'd say absolutely not, as long as it's appropriate for you to refinance," says Roger Harrington, a mortgage advisor and publisher of Roger Harrington's Mortgage Advisory in White Bear Township, MN.

"While almost everyone with a high rate has already refinanced, most people who will benefit from refinancing now have had something happen to make refinancing now appropriate. Maybe a divorce, needing money for a cabin or education, maybe getting credit cards under control, maybe an old ARM or balloon loan that they'd rather fix at current low rates. Maybe they got a 3-, 5-, 7-, or 10-year loan, thinking they would move before it changed and now they're not so sure about the move. There is a never-ending supply of reasons for people to refinance, and for those people, rates are great now," Harrington added.

Stephen J. Hanleigh, president of the Santa Clara County (CA) Association Of Realtors says timing is less a factor than common reasons financially savvy home owners refinance -- to lower monthly mortgage payments, to shorten loan terms, to pay off more expensive and non-tax deductible debt and for capital improvements or investments likely to give you a better return on your money that the mortgage.

"Given any one of those situations, it's almost always a good time to refinance, as long as the interest cost is deductible," said Hanleigh, also broker owner of Realty Center in San Jose, CA.

Whatever the reason, the fundamentals still apply -- refinancing homeowners need to stay put long enough for the new mortgage to pay off in terms of covering the up front cost of the refinance.

That means adding all the costs of refinancing (points, fees, settlement charges, application fees, appraisal fees, credit report fees, recording fees, title insurance, underwriting fees -- all of them -- and then determining how long it'll take savings from the new mortgage to payoff the refinancing costs.

"If you'll be in the house for at least a few years, it's worth t to crunch the numbers. Even if you missed rock bottom lowest interest rates, you may still save yourself a bundle," said Nancy Castleman, co-author of "Slash Your Debt: Save Money and Secure Your Future" and "Invest In Yourself -- Six Secrets to a Rich Life," both works from the Good Advice Press in Elizaville, NY.

To determine the payoff duration in months, divide the total refinance cost -- all costs -- by the expected per-month savings.

"It is also compelling if the refinance rate of a new no cost mortgage (you pay nothing at closing and nothing is added to the loan balance) mortgage is lower than your present rate," said Bruce Hahn, president of the American Homeowners Foundation.