With a lower interesti ratei on your home loan, you will have less interest to deduct on your income tax return. That, of course, may increase your tax payments and decrease the total savings you might obtain from a new, lower-interest mortgagei.

In refinancing, a mortgagei company usually offers a range of interesti rates at different amounts of points. A pointi equals one percent of the loan amounti. For example, three points on a $100,000 mortgage loan would add $3,000 to the refinancing charges.

Another way to make a refinancei work for you is to refinance for more than the balance remaining on your old mortgagei -- in effect, tapping your home equityi, or "cashing out," in mortgage speak. Thanks to favorable rates, you may be able to do so without boosting your monthly outlay. For example, at 8.5%, the payment on a $200,000, 30-year fixed-rate mortgage is $1,538. But at 7.5%, that same payment lets you borrow nearly $20,000 more.

Many borrowers use a refinancei to shorten the term of the mortgagei. And brace yourself: Even at low rates, a shorter term means a higher monthly paymenti. The benefit is that you'll build up equityi faster and pay far less in total interesti over the life of the loan.

The home refinance option has been very popular over the last several years since interest rates have been so low. While mortgage refinancing can be worthwhile, it does not make good financial sense for everyone. Some things to consider before refinancing are: