Should we Refinance? You mean you haven't yet? Where do we start?

JUST WHEN YOU THOUGHT EVERYONE WHO WAS GOING TO REFINANCE A HOME MORTGAGE HAD LONG SINCE DONE SO, INTEREST RATES DIPPED AGAIN, TO UNDER 6 PERCENT. THAT SPAWNED YET ANOTHER SURGE OF REFINANCING APPLICATIONS FOR LENDERS AND CAUSED LONG LINES AND FRAYED NERVES AT REGISTRY OF DEEDS OFFICES AROUND THE STATE.

Middlesex County's registrar, Eugene Brune, said he had to put his administrative duties on hold and help customers at the counter. "We all have to pitch in," said Brune, who expects the number of real estate filings to double in 2002, compared to last year. For the first 10 months of this year, the Middlesex Registry of Deeds recorded 358,453 transactions, up from 265,030 for the same period in 2001, a 36 percent increase. That reflects a national trend. The Mortgage Bankers Association of America reports that in August, September, and October, 74 percent of mortgage applications were for refinancings - up from 63 percent in the 2001 quarter.

"Homeowners realize they can shave as little as a half a percentage point off their mortgage without paying points, and they're doing it in droves," Brune said.

Nationwide, the average rate on a 30-year fixed mortgage was 5.94 percent for the week ending Nov. 15, according to Freddie Mac's Primary Mortgage Market Survey - the lowest since Freddie Mac began tracking it in 1971, and the third time this year that the average has gone below 6 percent. The 30-year, fixed-rate average rose to 6.03 percent for the week ending Friday.

Frank Nothaft, Freddie Mac's chief economist, said the refinancing boom and record home sales are driving an anemic economy. "The mortgage market is a major part of supporting economic activity in the US," he said. "The refi savings are putting extra cash in the pockets of families and has the same stimulus effect on the economy as a tax cut." Lenders say about half of the homeowners who refinance take cash to renovate homes.

But the low interest rates may not last indefinitely. Many economists say the 30-year rate will rise early in 2003, and could reach 6.75 percent by year's end. SIDEBAR: QUESTIONS AND ANSWERS WHAT IS REFINANCING?

The term is misleading - it makes it sound as if the original mortgage is being changed. In fact, the borrower is getting a new mortgage.

When should I refinance?

When mortgage interest rates drop. Getting a lower rate will reduce your monthly payment and save you money over the life of the loan.

The experts used to suggest refinancing if you could get an interest rate that was 2 percentage points lower than what you already had. They based that reasoning on the amount of time it took to recover the cost of refinancing. But today, with low closing costs - or sometimes no closing costs at all - it's feasible to refinance if the rate drops by one-quarter point.

One important caveat: Loans with no points and no closing costs have higher interest rates. That's how the lender covers the cost of the refinancing.

Are there other reasons to refinance?

* To switch from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage. That locks in a rate you can live with and guarantees it won't go up.

* To switch from a fixed rate to an ARM. If you plan to sell your home in the next few years, you can lower monthly payments with an ARM. Even if the loan will be adjusted upward in three or five years to a rate that's too high for you, it won't matter if you sell the house by then.

* To convert to a loan with a shorter term. That lets you save on interest payments and build up equity in the property more quickly. But monthly payments will be higher.

How do I decide if refinancing is really the right move?

The decision depends on several factors: the new interest rate, closing costs, the length of time you plan to stay in the house or condo, how much equity you have built up in the property, and whether you plan to take cash out of the refinancing to pay for something like a home improvement project or a new car.

If you plan to move in a year or so, closing costs on a new loan might mean the refinancing is not worth it. For example: A typical closing cost on a 0,000 loan for a single-family home is ,000, not including points. With a 6.5 percent rate, the monthly payment would be ,264. Refinance at 6 percent, and the monthly payment would drop to ,199 - a savings. It would take about 31 months to recoup the closing costs.

What is a 'cash-out' refinancing?

One that lets you walk away with cash that can be used to pay for things like home improvements, new cars, or college tuition.

Home values have soared in most Massachusetts communities since the mid-1990s, and many homeowners have built up substantial equity in their properties, qualifying them for cash-out loans. Typically, banks will lend up to 80 percent of the equity you hold in the home.

For example: Your home is valued at 0,000. The loan balance is 0,000. You may be able to borrow as much as 2,000.

Do I have to go the lender who gave me the original mortgage?

No. Shop around, and do business wherever you get the best deal. If you apply to the original lender, however, you might save money on closing costs because new documents - such as an appraisal - might not be required.

Will I get the best rate with a mortgage broker?

Not necessarily. Mortgage brokers are limited by the lenders they use. Some borrowers use a mortgage broker to find the best rate, but then do their own research to see if they can beat it.

Related links:

1. Low Interest vs. Refinance Option
2. What you should consider before refinancing loan
3. Mortgage Rates May Stay Low but They'll Rise from Historic Lows, Broker Sa