A woman walks to an open house in San Diego....

A woman walks to an open house in San Diego. The rate on 30-year mortgage loans has been below 4 percent since December, 2011. (June 13, 2012) Credit: AP

These days, lenders are incredibly picky when it comes to customers. When I looked into refinancing a few months ago, a mortgage broker asked for two years of tax filings, and wanted my accountant to certify them. Since the savings on a new loan would've been minor, I passed.

That's not the advice you hear most, though, when it comes to refinancing in today's rate market.

Unless the U.S. economy goes on life support again, it's hard to believe that rates will go much lower. On Thursday, Mortgage buyer Freddie Mac said the average on 30-year loans dropped to 3.66 percent -- a record. We're experiencing the lowest mortgage rates in two generations.

Yet, it's not always a good time to refinance. Here are some key considerations:

Do you want to get into more debt?

By itself, refinancing typically involves closing costs that are from 2 percent to 4 percent of the loan value. Many homeowners don't pay those costs up front and add them to the loan balance. Lower monthly payments aside, why add to your mortgage debt if you've lost equity?

Do you need to cut your losses?

If you think of your home as an investment, you may not see any equity appreciation for years. Is the money you spend on refinancing costs sending good money after bad?

Are you realistic about your ability to qualify for a refi?

In the worst real estate markets, refinancing may not be possible if your equity loss is too great or you're underwater -- that is, your mortgage balance exceeds the market value of your home. Most lenders won't even take your application if this is the case.

Those with less-than-stellar FICO credit scores or spotty income won't be offered the lowest rates. And you may even have to pay points -- a percentage of the loan value -- to "buy down" the rate even more. Clean up your credit record if you can before you apply to boost your FICO score.

Will you even get a rate that's worthwhile?

You won't get the best rate if you fall into a number of borrower categories. You have to watch out for surcharges in loan rates called "loan level price adjustments." For example, say your FICO score is under 620 and you only have a 5 percent to 10 percent equity stake.

Loans underwritten by Fannie Mae, for example, will impose an "adverse delivery charge" of 3.25 percentage points. You also may be penalized for cash-outs, adjustable-rate loans, manufactured homes, condos and investment or multiunit properties.

So unless your credit score is above 700, your income is steady and you're not buying properties subject to surcharges, those bargain rates may be an illusion.

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