Usually you should do a mortgage refinancing when rates are 2% lower that the rate you currently have. But you still can refinance even if the rate difference is less than 2%, because a small reduction in the loan rate still cut your monthly payment appreciable.

For example, the monthly payment on a $100,000 loan at an 8½ percent rate would be around $770. If the rate were lowered by one percent to 7½, the monthly payment would drop to about $700, which saves you $70 per month.

Be smart when considering mortgage refinancing. You'll be rewarded if you are! Start gathering all the information you can get regarding your options, you'll be in a better position to make the better financial decisions.

Here are 5 key mortgage refinancing points:

1. The lowest interest rate is not necessarily the best deal. Many lenders will make amazing initial offers, only to charge you later several points on top of the loan.

2. Also remember that the mortgage refinancing closing costs may vary with different lenders. They normally include credit report fees, title company search and insurance fees, loan origination fees, appraisal fees and documentation fees, among others. Lenders are obliged to give you an estimation of the closing costs, so ask them for that. Some lenders may advertise "no closing costs" on their refinance loans, but usually they recoup those fees by charging a higher loan rate.

3. Look for other fees involved when you refinance. Some lenders require that you keep a 12 months property tax amount in escrow. Also ask if your homeowners insurance will be paid by you directly or if the lender will require an escrow account for that as well.

4. Online banks have lower overhead costs and more streamlined account and loan processes, which enable them to usually give you your best loan deal. If you do your research online you can get very competitive loan rates.

5. It's very important to get everything in writing. You should also pay attention to deadlines. Id you are offered a specific interest rates, make sure it's written. Check if those interest rates are only guaranteed for a short period of time, usually 30 days.