Now that the Fed is buying up all the mortgage backed sercurities form Fannie and Freddie, mortgage rates are dropping. You might have missed the headlines in the paper "Mortgage rates at 30 year lows!" The idea behind this, is to encourage people to buy homes to help the suffering housing market, and get people to refinance to get more money into the banks. It benefits you to refinance when you can get an interest rate at least 1% lower than your current rate. This move will usually pay for itself in 2 to 3 years time, and continue to save you money for the life of the loan. I am seriously considering refinancing and will pounce on a nice 4.5% rate.