Why pay high if you can pay less on your mortgage payments? How would you know if it is time to refinance your existing mortgage and apply for a new one?

Would the rates and the current mortgage market be the best indicators? Would the mortgage insurance and rising payment amounts help decide if the borrower will apply for refinancing?

Fixed rate mortgage -you can easily compare the rate on your fixed rate mortgage to the current mortgage rates and realize if you will consider refinancing. If there is no other compelling force, and the rate on your fixed rate loan is lower than current rates, you should probably stick with it.

On the other hand, if you have an adjustable rate mortgage (ARM) -- and rates are getting higher, your payment will also be rising. In such case, consider how much more you'll be paying per month. A financial planner, loans officer or even your friendly realtor can impart to you information on the market. With their opinion and facts given to you, you can better decide whether refinancing to a fixed rate now is more advantageous in the long run.

But it is not just the rates that would affect your decision to refinance. You now have to check if your existing mortgage requires you to carry mortgage insurance and if you have built enough equity on the property to forego the insurance. If you can do without the insurance, refinancing could save you big time. Even if rates have remained unchanged or have increased slightly.

When was the last time your signed a three- or five-year adjustable rate mortgage (ARM)? If you have done so in the last few years, check when your introductory term expires. You'll want to get a head start on refinancing your loan unless you're prepared to begin making a much higher payment. This type of loan allows you to make reduced payments (interest only) for the first few years. After that period expires, the loan reverts to a regular amortized loan where you will pay both the principal and interest. If you your income has not increased significantly, get ready for leap in your monthly bills.

If the introductory period on your three-year, five-year, or other loan is set to expire, consider refinancing before you get the shock of your life.

On some occasions, mortgage payment reduction is not the main reason for a refinancing. You may also be thinking of paying down some of your higher-interest loans, or have a child going off to college soon, or be renovating you kitchen or bathroom. You can get cash through refinancing by drawing some amount against the equity in your home without taking out another mortgage.

There are really good reasons why people refinance. Establish why you want to refinance, make sure that the timing is right and that you can afford it.