Is Now the Time to Refinance?

(MoneyWatch)  The Federal Reserve's recent announcement that it would buy $1 trillion of bonds had the effect of lowering mortgage interest rates by nearly a half point. Lately, 30-year fixed loans were going for around 5 percent and 15-year fixed for 4.5 percent or less.

So is now the time to refinance?

For those playing "I got the lowest rate on my block," the time has come to put up or shut up. Waiting for another rate drop, if it comes, won't save you much on an average size loan. And at some point, rates will turn up again.

On a $100,000 30-year fixed rate loan, the difference between what you'd pay at 5 percent vs. 4.75 percent is nominal. Actually, it's about $15 a month ($180 a year). If you're lucky enough to lower the rate to 4.5 percent, you'll save about $30 per month ($360 a year). Figure out your own savings based on your mortgage.

Sure, if you can save $15 or $30 per month, you should. But if your overall financial strategy depends on saving $15 a month on your mortgage or you won't pull the trigger on a refinance, perhaps you should look at other places where you can save $15 per month in your budget:

• Take your lunch to work three times a month
• Give up three packs of smokes a month
• Buy two fewer beers if you eat out
• Eat out once less often (save about $30 to $40 for two people, depending on where you go)
• Take public transportation instead of driving to work (especially if you pay for parking)
• Skip Starbucks five mornings a month (assuming a $3 drink average)
• Drink water from the tap rather than bottled water
• Make dinner rather than eating takeout four times a month
• Replace a few incandescent light bulbs with CFLs
• Buy a programmable thermostat and use it to save on your energy bill
• Rent a movie from your local library instead of going to a movie theater
• Sign up for Skype

There are plenty of ways to save money each month. But if you're serious about refinancing (and not just waiting so you can brag at the water cooler), here's your chance.