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Interest rates today may be lower than in past years, and refinancing allows you to apply for a new loan based on those lower interest rates.

However, there are several new concerns you need to be aware of.  First, do you have excellent credit – not good – but excellent?  Is your FICO score well into the 700s?  Are you a good credit risk?  These are the questions most mortgage lenders will ask and investigate before they will consider refinancing.

The irony of this current recession is that when the Federal Reserve lowered the interest rates, it was a move that enabled many homeowners to apply for refinancing.  On the other hand, the Rescue Plan that was implemented to help banks resume lending again failed miserably.

Thus, loans for cars, college, and even mortgages were not as easy to obtain as one might have thought.  If your credit score is below the 750 mark, or if you have too much debt or missed payments – the idea that you could refinance your home at this time is a moot point.

According to the National Consumer Law Center, you may not want to refinance your home if:

* You cannot afford to pay the up-front costs associated with refinancing.

* You intend to refinance in order to pay unsecured debts, such as using it for collateral purposes.

* You already have a second mortgage.  It is not a good idea to use the same company to refinance.  This move can incur additional penalties such as closing costs and higher interest rates.

* The interest rate you will pay for refinancing is higher than your current interest rate.

* A lender contacts you offering a new mortgage equal to the old one.  Decline this offer unless you know for certain that the interest rate is much lower than the original mortgage.

If you do decide to refinance, here are five tips to consider:

* Comparison shop for the best and lowest interest rates.

* Some lenders will add hidden fees to make up for low interest rates.

* Contact the lender that currently holds your mortgage.  They may be willing to offer lower interest rates.

* Do not pay points when you refinance.

* If you think now is a good time to refinance based on the low interest rates available - do it.  Avoid waiting for rates to fall even lower - it may not happen.

Before you even attempt to refinance your home you have to ascertain if you have excellent credit, as this is the only way you can be assured of obtaining a lower interest rate.