Q. When is a good time to refinance my mortgage?

A. The best time to refinance a mortgage is when it's to your financial benefit by refinancing.

You may have have heard of the (2 percent rule) in mortgage refinancing. What this rule says is that you need an interest rate of at least 2 percent less than your current interest rate in order for refinancing to make sense. While this may be generally true there are times when it is not.

The way to determine whether or not a refinance makes sense for you is to look at the new monthly payment and the closing costs and fees of the new loan. Let's say you have a mortgage of $225.000 at 7 percent but interest rates are now 6 percent. By refinancing at the lower rate you would save approximately $200 a month on your mortgage payment.

If you were to have closing costs and fees of $4000 we could easily figure out how long it would take to recover your costs. At a savings of $200 per month it would take 20 months to reach a break-even point. Once you reach the break-even point, you'll be saving $200 per month for the life of the loan.

If you were to keep your home for another 10 years after the break-even point you would save a total of $24.000. That's not a bad deal!

Before making the decision to refinance, you want to be sure that the money you save by refinancing is more than the money it costs to close. When you're shopping for rate quotes be sure to get the percentage rate and the the costs for fees and closing. Most mortgage lenders will be flexible in this area. Either you pay a little more in closing costs for a lower interest rate, or you pay less in closing costs in exchange for a slightly higher interest rate. It pays to shop around.