• Refinancing your existing mortgage loan can save you a significant amount of money. You can shave more than $250 off your monthly mortgage payment if you refinance your 30-year fixed-rate mortgage loan from one with an interest rate of 7 percent to one with a 5 percent rate. That's a savings of more than $3,000 a year. Refinancing isn't always easy, though -- You'll need a good credit score, stable monthly income and a home that hasn't declined too severely in value.
  
  

Debt-To-Income Ratio

• Debt-to-income ratio is key when you are applying for a mortgage refinance. Most lenders or banks won't work with borrowers if their monthly debt obligations are higher than 36 percent of their gross monthly incomes. You can reduce your debt-to-income ratio by either bringing in more money each month or by paying down your debt.
  
  

Credit Score

• You'll need a high credit score, too, if you want to qualify for a home refinance at the best interest rates. This three-digit score, also known as your FICO score, is a numerical representation of the way in which you've managed your finances in the past. Your score will be lower if you have a history of paying your bills late and a high amount of debt. Lenders might not approve your refinance request if your FICO score is under 620. If your score is 720 or above, you'll usually qualify for the lowest interest rates.
  
  

Current Market Value

• Your lender will also require you to have a certain amount of equity in your home. Most lenders ask for at least 20 percent. Your lender will send an appraiser to your home to determine the current market value of your residence. If this value has fallen since you bought the home, your equity levels will have dropped. If your home value has dropped significantly enough, it might push you out of the 20-percent-equity range.
  
  

Shop Around

• You are not required to refinance with the provider of your existing mortgage loan. You can shop around for the lender that is offering the best interest rates and the lowest origination fees. Fees, especially, can vary from lender to lender, with most refinances costing about $3,000 to $5,000 in closing costs.