With today's low interest rates, you may be thinking of refinancing your mortgage.

But before you jump in, there are a few things you should know.

When you refinance, you pay off your existing mortgage loan and take out a new one. The refinance process is very similar to the process you went through to purchase your house in the first place. Think about what you need before you look into the possibility of refinancing.

Should you refinance?
Would refinancing your loan benefit you? There are several reasons to refinance. If interest rates are lower now than when you bought your house, refinancing can save you money each month or help you pay off your debt faster.

If you have equity built up in your home you may be able to access it through "cash out" refinance; you can access the equity in your home to use for a vacation or college education or even home improvements.

Will it save you money?
Once you know why you want to refinance, whether refinancing will save you money is the next big question. Use our calculator to determine if your payments will be lower and by how much.

"There used to be an old refi rule of thumb that said you have to expect to stay in the home for five years and rates needed to go down by 2 percent," added Keith Leggett, senior economist for the American Bankers Association, a trade group based in Washington, D.C. "Because of the competition for mortgages, the refinancing process does not cost as much anymore."

"Plus, if you refinance now and lower your monthly mortgage payment, that will free up cash flow to take care of debt you may have accumulated," Leggett said. "You can pay off your credit card bills with the mortgage savings from refinancing."

What's the right mortgage loan?
Do you know how to select the best mortgage loan for your situation? Look for a lower interest rate. Try to find a loan that will allow you to pay it off as quickly as you can. How long you plan to hold the new mortgage will also help determine what kind of mortgage you should choose. Search for a the best rate from a lender in your area using the Bankrate.com mortgage search engine.

If you plan to move in a few years, you might consider a short-term mortgage such as a one-year adjustable-rate mortgage or a balloon mortgage.

But if you plan to be in your home for a number of years, you might consider a more traditional fixed-rate loan, or choose an adjustable-rate mortgage and consider refinancing again in a few years.

A mortgage professional can help you analyze your current mortgage and explain your alternatives today. Calculate your savings with various mortgages and choose the one best suited to your situation.

How to apply
If you've decided to refinance and have chosen a mortgage, the next step is the loan application process. You will fill out the same basic application, with the same information, and the same fees are paid at closing.

If you are refinancing with the same lender who holds your current loan, ask if any of these fees can be reduced or waived.

Lenders will evaluate the same things they did when you applied for your first loan:

• How much are you asking to borrow, and will you be able to pay it back?
• How does your credit history look?
• How much is the house worth?
• Is loaning you money a safe investment?

Every lender will consider your ability to repay the loan, your credit history, your current assets, and any collateral, and then decide whether to approve your loan. Again, like the first time, you will complete the process at the closing meeting.

Expect fees when refinancing
Don't let unexpected closing costs give you sticker shock. You can expect to be asked to pay some or all of the following fees by a lender, but remember that everything is negotiable.

Application fee: This charge imposed by your lender covers the initial cost of processing your loan request and checking your credit report.

Title search and title insurance: This charge will cover the cost of examining the public records to confirm ownership of the house. It also covers the cost of a policy, usually issued by a title insurance company, that insures you in a specific amount for any loss caused by discrepancies in the title to the property.

Be sure to ask the company carrying the present policy if it can re-issue your policy at a "re-issue rate." You could save up to 70 percent of the cost for a new policy.

Lender's attorney's review fees: The lender will usually charge you for fees paid to the lawyer or company that conducts the closing for the lender. Settlements are conducted by lending institutions, title insurance companies, escrow companies, real estate brokers and attorneys for the buyer and seller.

In most situations, the person conducting the settlement is providing a service to the lender. You may also be required to pay for other legal services relating to your loan that are provided to the lender. You may want to retain your own attorney to represent you at all stages of the transaction, including settlement.

Loan origination fees and points: The origination fee is charged for the lender's work in evaluating and preparing your mortgage loan.

Points are prepaid finance charges imposed by the lender at closing to increase the lender's yield beyond the stated interest rate on the mortgage note. One point equals 1 percent of the loan amount. For example, one point on a $75,000 loan would be $750.

In some cases, adding them to the loan amount can finance the points you pay. The total number of points a lender charges will depend on market conditions and the interest rate to be charged.

Appraisal fee: This fee pays for an appraisal, which is a "supportable and defensible estimate" or opinion of the value of the property. An independent firm usually does this appraisal. If you are paying for the appraisal, be sure to get a copy.

Miscellaneous fees: Depending on the type of loan you have and other factors, another expense you might face is the fee for a VA loan guarantee, FHA mortgage insurance, or private mortgage insurance. Additional fees may be express delivery fees or courier fees, credit report fees, packaging fees, etc. Ask your lender for estimates of cost and make sure you know what you are paying for.

You'll want to check carefully on all the various costs involved in your new loan to save all you can. Don't be afraid to negotiate. Shop around for the lowest rates. Shop around for the best service. Shop around for a reputable firm. Remember that the lowest rates do not necessarily guarantee a smooth loan process.

One possible way to save is to check first with the lender who holds your current mortgage. The lender may be willing to waive some of them, especially if the work relating to the mortgage closing is still current. This could include the fees for the title search, surveys, inspections and other costs. Consider your situation, and choose what's best for you.