While interest rates are at an all time low, it is not that easy to actually get one. Due to the state of the market, lenders are more hesitant to wade into certain mortgage situations, especially for those that do not have excellent credit scores. Note that the fair credit scores of today, were considered great yesterday. The first big step is too look at where you fit in regards to qualifications. Based on today's standards, a credit score of about 740, and equity along the line of 20% will be needed. Mark Miskiel, with Lighthouse Mortgage in Arizona, says that "Banks are looking for reasons not to lend you money,". Of course, equity under 20% does not necessarily take you out of the running. The housing package plan instated by Obama, does allow those who are up to 105% in debt to get government-backed loans. The catch is that to qualify for that kind of loan, the original mortgage has to be through Fannie Mae or Freddie Mac. You also have to be able to prove that you can make your paymnets and you will probably have 0.25% or 3% in fees added onto your rate.

Another important step that must be done before trying to get in on a new lower rate is to get out of your HELOC. A HELOC is a home-equity loan and almost no refinancer will work with you if you have one. Therefore, your home equity lender has to agree to put the new loan on a type of secondary basis, meaning that if you are later not able to repay your loans, your first and main lender will get paid first. Bob Moulton with the American Mortgage Group in N.Y., says that this can take about a month. To make the process faster, it is easier to do a consolidation refinance with your home-equity lender, or to submit the paperwork for the above while you look for the new main mortgage.

Where should you look for the new loan? It is good to look at each bank, as each one has different standards and qualifications, what they deem a good prospect or no. Keith Gumbinger with HSH Associates, a mortgage data firm, remarked that the best deals can probably be found with small local banks or credit unions. Once you find a good loan that you can qualify for, it is also a good idea to pay a point right off. A point is the equivalent of 1% of your mortgage total. Paying a point, gives you an eighth or even a quarter of a percentage point decrease in your rate. Some lenders are also providing incentives, hoping to eliminate those constant refinancers, by removing half a point to those who pay one upfront. Paying for points ahead of time will definitely help you out in the long run, making an overall better package with the new refinance terms you have acquired.