As Rates Fall, Is It Time to Refinance?

After the real estate industry -- and its related securities -- almost deep-sixed Wall Street, it's hard to imagine there would be a silver lining: A five-week decline in 30-year fixed-rate mortgages has spurred a surge in refinancing, according to the Mortgage Bankers Association.

Refinancing has more than doubled since August, according to the trade group. Does refinancing make sense given current economic conditions? For some, it does. Swapping an adjustable-rate mortgage, or ARM, for a fixed rate, or FRM, is often a smart move -- especially now, when interest rates are relatively low. But for homeowners already holding FRMs, deciding whether to refinance depends on how much can be saved.

The first step is to make sure you're not "upside down" in your mortgage, that is, you don't owe more than your house is worth. In some parts of the country, slumping prices have made refinancing difficult, or impossible, because homeowners who bought at the peak of the market owe more than the current assessed value. ...