1: What is the purpose of the refinance?

Do you want to pay less interest or lower your monthly payment? Do you want to get out of a variable rate mortgage and lock in a low rate?

2: Does my house have equity?

Homeowners need to have at least 20 percent equity in their home to qualify for a new loan without paying private mortgage insurance. Adding PMI to the cost of a new loan could negate the benefit of a refinance.

3: How is my credit score?

Mortgage rates operate on a sliding scale, with the lowest rates going to applicants with the highest credit scores of 720 or higher. Borrowers with scores below 620 will have trouble qualifying for a mortgage at any rate.