Many borrowers wonder, “When is the right time to refinance?” A simple answer to this question is to take the total cost of the refinance and divide it by the monthly savings.

For example if the total cost to refinance is $2000 and the monthly savings is $100, the break-even is 20 months or nearly two years. In this case, if you are planning on staying in the property (or the loan) for more than two years you should refinance.

But what if rates drop within that two-year break-even period? In many cases it is beneficial to look at a relative newcomer to the refinance arena – the no cost refinance.  If the cost to refinance is zero, as it is with a true no cost refinance program, then go ahead and refinance no matter how long you plan to stay in the property. Furthermore, if rates drop after you close, you can simply refinance again with no closing costs. The only downside of the no cost refinance is that you will pay a slightly higher rate than if you pay closing costs to refinance.

Mortgage rates have risen in recent months and if your rate is 5.75% or higher (or you have an adjustable rate mortgage) now may be a good time to check into the best refinance options for you.