With all the talk of the subprime market tending towards foreclosures, one might not think that now may still be the best time to refinance a mortgage.

In 2008, homeowners will consider refinancing because their adjustable-rate mortgages will hit their reset dates, sending rates and mortgage payments to the stratosphere.

To determine if your mortgage will encounter a reset, simply read your loan contract. In the section that discloses the rate’s change date, there should be an explanation of how the lender will calculate the new rate. The ARM’s rate will be based on an index and a margin. The index is an independent interest rate that is widely known, maybe the yield on the one-year Treasury note, or maybe the six-month London Interbank Offered Rate (LIBOR).

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