"Come into my parlor", said the spider to the fly. "We've got the lowest interest only loan. Just put up your house as equity." The fly immediately put up his house and went into the parlor, only to be devoured as a savory dinner. Are you that unfortunate fly?

How to get a better deal

Depending on your financial motivation like cash flow flexibility, you are looking at more savings in a year's time from a lowered monthly payments compared to your current mortgage.

Remember that the longer the loan term, the lower the monthly payment. If you add up all your expenses in 30 years time, you'll have paid more than double the loan amount. So get a lower interest rate and be sure there are no additional or hidden costs.

If you have a $200,000 30-year mortgage loaned on an interest rate of 8%, you'll have paid $440,400 at $1,468 a month. If you refinance at 6% you will be paying $1,199 a month or a total of $359,700. But wait, there's more. Depending on the closing costs, it will take months before you can break even.

If you are staying in the house for more than 10 years get the fixed rate but if you are going to sell the house in five year's time better get the adjustable rate mortgage.

Never rush into a home refinance. Take your time until you have understood all the workings of your target refinance program. Read the contract carefully.

Better reasons to home refinance

Just because everybody has lined up for a home loan does not mean it will work according to your expectations. Loans have to be paid back. To be able to do so on the same amount of cash inflow for a number of years means changing your lifestyles and spending habits. Or like the fly, you will be dinner for the spider.

It is not easy to lose a home. Apart from destroying your credit score, you'll have to uproot your family from all that is dear. So play smart when you are getting a loan.

A bankable reason to home refinance is to get additional cash flow for your business expansion or fund a wife's last year in college. Both ways you see an end goal towards increased revenues and income.

Why are you getting a home refinance?

There are many reasons to get a home refinance, and 99.9% of these reasons are to pay off debts. Experts would advise to consider carefully your reason to refinance and stake your home.

Another reason to refinance is to get investment money for a business. This sounds good, but the risk is great. Would you dare navigate un-chartered depths at the risk of losing your home?

Perhaps you've got this zany idea to earn tax deductions so you took out a home refinance loan. In principle, you are paying a dollar to earn 30 cents, and for this you put your home.

Not all these reasons for home refinance are recommended. Your house is the biggest investment of your lifetime and putting it up for these flimsy reasons is nothing to crow about.