When deciding to refinance your home, think about the following:

• Weigh the savings:  check the current market for available rates and determine the costs associated with refinancing. These costs can include an appraisal, points, and various fees. Use our Should I Refinance? mortgage calculator to see if refinancing your home is right for you.
• Consider how long you plan to stay in your home:  if you're planning on moving in a few years, then the month-to-month savings of refinancing your home may not outweigh the costs. But if you are planning to live in your home for at least three to five years, you might benefit from paying the points and closing costs to get the lowest available rate.
• Think about your taxes:  lower interest on your home loan means you'll have less to deduct on your federal income tax return, which may impact the amount of money you'll save refinancing your home. (Consult your tax professional.)

  You should also consider that the IRS currently requires that you deduct any interest point paid up-front for refinancing over the life of your loan, instead of the year that you refinanced.

  In other words, any point you pay for a lower interest rate cannot be deducted all at once; instead, you will be required to spread out your deduction for the duration of the new loan. For more information, refer to the section Paying Discount Points. (Consult your tax professional.)

• Calculate your current equity:  if you've had your current mortgage for at least three years, you've probably reduced your balance by several thousand dollars. So you may be able to "roll" your refinancing closing costs into your new loan and still end up with a mortgage that is smaller than your original one, with a lower interest rate and monthly payment.
• Get some cash:  one way to make refinancing work for you is to "cash out" – refinance for more than the balance of your current mortgage. With favorable interest rates, you may be able to take cash out without increasing your monthly payments. For example, at an interest rate of 8.5% APR, the payment on a $200,000, 30-year, fixed rate mortgage is $1,538. But at 7.5% APR, your same monthly payment would allow you to borrow nearly $20,000 more! (Some states restrict cash out refinancing, check with your First Horizon Relationship Manager.)
• Consider other mortgage programs:  switching to another type of mortgage may save money. Three options include shortening the loan's term, trading a fixed-rate mortgage to an adjustable-rate mortgage loan, or vice versa – trading an adjustable-rate mortgage for a fixed-rate mortgage.

Other factors to consider:

• Paying Discount Points: determine the range of interest rates at different point amounts and how they affect your monthly payments
• Refinance Costs: identify what costs are involved and what can be covered in the loan