If you’ve been kicking yourself for not refinancing your mortgage when rates sank to 41-year lows last summer, here’s another chance to act.

After drifting upward through the fall and early winter, rates have turned down again. The standard 30-year, fixed-rate mortgage now averages 5.82 percent, just half a percentage point above last June’s low.

Mortgage rates are heavily influenced by the rate on the 10-year U.S. Treasury bond, and that rate has drifted lower because bond investors think weak employment figures will keep the Federal Reserve from raising short-term rates for some time.

Would it pay, then, to wait for mortgage rates to fall even further?

I’d do that only if I were willing to risk having to pay a higher rate. If the economy gets stronger and employment perks up, bond rates could rise – lifting mortgage rates with them.

It doesn’t pay to be greedy. Even if holding out does get you another quarter of a percentage point off your new mortgage, you might save only a few dollars a month.

The fact is that today’s rates are extraordinarily low. It would be a shame to miss out.

But how do you know if refinancing will pay off?

It boils down to whether you’ll have the new mortgage long enough for the reduction in monthly payments to offset the fees you’ll have to pay to get it.

If the closing costs were $3,000 and the monthly saving was $100, it would take 30 months to make the refinancing pay. If you’re going to move in 24 months, don’t bother. After 30 months, however, every additional month you have the mortgage will bring a pure saving of $100.

If you want to get fancy, you should adjust for taxes. By reducing your interest rate, you reduce the amount you pay each month in interest. That reduces the interest-rate deduction you take on your federal income tax return. The $100-per-month saving might turn out to be only $75, for example.

To figure this, you must know your tax rate – 15 percent to 33 percent for most people. Your tax return is the best place to look for this; but for a rough idea, look at your paystub and see what percentage of your gross pay is going to federal tax.

Be sure to compare the total interest you’d pay for the remaining life of the old loan vs. the new one.

You don’t want to pay 30 years’ of interest on a new loan if you could pay interest for just 10 years on the old one. Ideally, you should take out a new mortgage that would be paid off about the same time as the old one.

Jeff Brown is a business columnist for The Philadelphia Inquirer. E-mail him at brownjphillynews.com.)

(c) 2004, The Philadelphia Inquirer.

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AP-NY-01-26-04 0632EST