There has never been a better time in the history of the United States to refinance your mortgage. Now, this may sound like an outlandish claim, but refinancing your home mortgage during 2012 may be a once in a lifetime opportunity. Let’s explain why.
In 2008, when the Subprime Mortgage Crisis erupted and brought the entire global economy to brink of collapse, the U.S. government stepped in with a number of stimulus measures, including bailout packages and stimulus plans, in an attempt to fight off another Great Depression. One of the primary measures of economic stimulus was the Federal Reserve’s action of lowering its short-term interest rate target to near 0% for the first time in history.

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This move by the Fed was done in order to alleviate a Global Credit Crisis. When the Fed lowers interest rates as low as it did, it means that banks make virtually no money by keeping deposits at the Federal Reserve, which means that, typically, banks will be more likely to lend to customers, which, in turn, will spur economic growth as credit flows in the economy.

How This Relates To Mortgage Rates
The short-term interest rate target that the Fed sets is the basis for all interest rates in the U.S. Therefore, when the Fed cuts rates, banks will also cut rates on mortgage and auto loans. When the Fed raises rates, banks will raise interest rates on mortgage and auto loans.
Right now, mortgage rates are at record lows. In early March, the Fed announced that it will be keeping interest rates at these record lows through at least 2014.

Why You Should Refinance Now
Unless you purchased your home in the last two years, your mortgage interest rate is definitely higher than current rates. By refinancing your mortgage, you will be able to lock in these new low interest rates. A lower interest rates will benefit you in two primary ways:
1. Your monthly payment will be lower.
2. You will save an incredible amount of money over the life of your loan.
Depending on your current interest rate and the size of your mortgage, you could knock hundreds of dollars off your monthly payment by refinancing your mortgage. Furthermore, you will most likely save tens of thousands of dollars in interest payments over the life of your loan.

How It Works
Start out by visiting your mortgage lender and speak with a loan officer about a home affordable refinance program. It is typically a good idea to visit several lenders and make sure you get the lowest rate possible. Saving a few basis points can save you thousands of dollars in the long-term.
Once you apply for a refinancing loan, the bank will use the refinancing proceeds to pay off your first loan, and then you will be obligated to pay back the new loan according to the terms and conditions you agree to.

Bigger Savings
If you are comfortable with your current monthly payment, it may be very wise to look into refinancing to a shorter-term loan. For instance, if your current mortgage is 30 years, check to see what a monthly payment on a 15 year loan would be. Due to historically low interest rates, your monthly payment may only be a few hundred dollars more than it currently is, but you would be shaving over a decade off your loan, which would surely result in savings of tens of thousands of dollars over the life of your loan.
As you can see, refinancing your home loan has many benefits. Check with your local lending houses to see options in your area.