Home sales are lagging ever since all the special government home buyer incentives and tax credits dried up, so banks are pushing down mortgage interest rates to lows not seen in the past 30 years. Many people, especially those who bought their homes in the last 10 years or so, are asking themselves, “Should I refinance my mortgage?” and “Should I refinance my home loan and pay off other debt with these low rates?”

Only you can ultimately decide if this is the best finance move for you, but are are some of the things you should think about when you’re considering refinancing your home loan:

Current Mortgage Interest Rate Vs. New Mortgage Interest Rate: This is the most obvious thing to think about. If you originally bought your home with an 8% fixed interest rate loan or if you adjustable rate has risen over the year and yet you can get a fixed rate home loan today for about 5%, then refinancing your mortage could work out to be a good deal for you. But remember, when you refinance your home you have to pay a number of fees for filing paperwork, new home inspections, legal review and other services, so it won’t be all savings. Generally, when the new rate is more than 2% less than your old mortgage rate you should seriously look into whether or not you can save a fair bit of money over the long run.

Adjustable Rate vs Fixed Rate: If you have an adjustable rate mortgage now and your rates are good, you may still want to consider switching over to an equally low fixed-rate mortgage. While there are no guarantees, the chances are good that rates will rise again at some point over the life of your home loan, so locking in a fixed rate mortgage when you have a chance could end up saving you lots of money over the life of the loan, even though it may not make much difference in your monthly payments at the moment.

The Home Equity Problem: A lot of people have lost a fair amount of home equity over the past several years as home values have plummeted. This means that even though you’ve been paying your mortgage for years you may actually be underwater on the home loan or still not have much equity built up. Most mortgage companies and banks require your mortgage refinancing amount to be no more than 80% of your home’s actual value. So if your home is now valued at $200,000 you would only be able to refinance $160,000 ($200,000 x .80 = $160,000). In this example you could probably only refinance your home if the amount of money you owed on your existing mortgage was less than $160,000.

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Another Thirty Years of Payments: Most mortgages are still 30-year terms. If your current mortgage was a 30-year mortgage but you’ve already been paying for 5 years, then you only really have 25 more years of payments until you own your home outright. If you refinance your home then the clock is essentially reset and you’ll once again be making home loan payments for 30 years from the day you sign the papers. This extra five years could push back your retirement investing plans or even impact when ultimately decide to quit working.

Are you Selling Your Home Soon: You probably don’t want to refinance your home if you’re going planning to be moving within the next several years. You may save some money on your monthly payments, but the refinancing fees may still end up costing more than you would ultimately save in the next few years. It also doesn’t help improve your credit score and it may actually hurt your chances of getting a decent interest rate on the loan you take out for your new home.

Do You Really Need the Extra Cash: Many people take advantage of home loan refinancing so that they can essentially borrow more money at the same or lower rate than they are paying now. They then use that extra money to pay off additional bills or car loans or other outstanding debt. But loan interest rates across the board are much lower these days, so many people are finding that borrowing money from a home loan at 5% to pay off a car loan that only has a 2% or lower interest rate simply doesn’t make sense. Many people have also downsized their economic needs in this recession and are now saving more money than ever. Overall, the “need” for money is not as great as it once was. If you’re happy with your current home loan and you find that refinancing won’t really save you very much money in monthly payments then it may not be worth borrowing just for the sake of taking out another loan.

While simple online loan calculators are good for giving you a general estimate of what you might pay with a refinanced mortgage, the exact fees and monthly payments will have to be worked out by individual lenders. One bank or institution may charge for certain services that another lender offers for free. You’ll also want to keep in mind that there is usually a lot of paperwork, phone calls and other things that you have to do to refinance your home loan, so it’s not something you want to jump into unless you have are willing to commit some time and energy into making sure you find the best deal you can. That being said, the low mortgage rates being offered by different banks and lending institutions are definitely making refinancing a home loan a much more attractive offer for many existing homeowners!