Refinancing is a means to save money and takes advantage of the low interest rates. Specifically, this is when you take out a new mortgage, and use the money to close out or pay off a current mortgage. If you refinance with a lower interest rate you'll reduce your monthly mortgage payment even if your new mortgage is for the same amount as your current mortgage. But before you take that big step, make sure you arm yourself and gather as much information concerning all aspects of the refinance and do it quickly.

With the interest rates so sensitive and volatile (they go up and down very easily), you must move quickly on locking into a low one with little up front costs. But you won't be the only interested party moving on these rates! So being informed on what is needed before hand can help facilitate the process for your application instead of having incomplete information that could cause your application to sit on some lenders desk.

Besides tapping into a rate while it is low, you also need to know that each time you apply for credit, your overall score is affected and you take a chance that it will drop. On top of the fact that Fannie Mae, one of the largest buyers on the secondary market of conventional mortgages, has placed burdensome high rates on loans to those borrowers with fair or less scores. Years ago, investors that were in the middle of a frenzy market, relaxed their guidelines which put these loans into high risk. Not anymore! Today, only those with exceptional credit scores, have access to good interest rates as well as to loans with reduced documentation, privileges that used to be available to almost everyone in the past.

Fortunately, the credit scoring system most lenders use, called FICO (Fair Isaac Company), doesn't punish you if you do your mortgage shopping in a relatively condensed period of time. All credit inquiries made within 14 days are lumped together as one, and your score doesn't reflect any inquiries made within the last 30 days.

Another reason to act quickly is so the inquiries get lumped together if they are done in a two week span. Due to the massive amount of people attempting to refinance and take advantage of the lower rates, you face standing in line at the lenders desk and that could cost you money.

It is critical to investigate what types of loans are available, what you can afford, and what will work for you over the long haul. The loans experts are there for a reason, they have to eat and earn a living so they are more then willing and able to share their knowledge of the loan process to you and what type of loan will work for your situation: a fixed-rate, and adjustable or a hybrid (a loan that stays fixed for 3-7 years and then adjusts to the market). Even when deciding on a fixed rate loan, the experts can help you calculate on how affordable a 15, 20 25 or 30 year loan would be based on your current income and forecasting your future income.

However, there are some easy steps you can take before apply that will help to facilitate your place in the waiting line to be closer to the top and they are as follows:

Do simple research and find out what the current rates are and what the exact costs are to buy down it down if you desire too. These costs will be called points. Get up close and personal with a mortgage expert in your area, they are all eager to help as they need to make a living and only get paid when you consummate the loan. So they will be more then willing to assist you in as much up front information as you request. They also can farm your application out to other companies if you should have a credit issue. Have them explain all the different types of loans, lengths and adjustability of the rates and determine what type fits your current and future needs.

Remember that the longer the loan is out there, the slower the equity builds up. If you can afford a shorter term loan, you will be able to turn the property over for a profit quicker and you pay less interest overall. However, if you're in for the long haul, interest is a good deduction at tax time also. Don't sit around waiting for the rates to "go as low as they will get" because there is no bottom to them, and no one can accurately predict how low or how and when they will go up. Take the best deal you can get for yourself today. You want to present yourself as a serious borrower and continuing to wait for the best rate possible could look the opposite for you and the loan officers might loose interest in you.

Before you begin, gather the following for reference:

• Pay stubs for the last month
• Your most recent W-2 forms
• Last year‘s tax return (or tax returns for the past two years if self-employed or employed at your current job for less than 2 years)
• Bank and brokerage statements for the last month showing escrow and tax balances
• Mortgage statement for the last 6 months showing payments and how they are distributed
• Statements for any home equity loans or lines of credit
• Homeowners insurance statement and any addendums