Refinancing: No time like now, but keep your eyes wide open

The landscape of refinancing has changed dramatically in recent months, but the reason for doing it remains largely the same. "It was about the dollars," says Owen Metz, 26, of Plymouth, Minn., who dropped his monthly payments by $150 when he refinanced earlier this month. "Anytime I can save money now -- it's almost a no-brainer."

The number of Americans refinancing their homes has been dropping recently. The Mortgage Bankers Association reports a 30% year-over-year decrease Christmas week, and a slight decrease the next week, after interest rates inched past 5% and tougher loan qualification measures took effect.

But refinancing is still an attractive option for many, and loan brokerages and analysts agree on a strategy: Move quickly, but cautiously.

"2009 was a better time, but 2010 is still a good time to refi those vintage 2007 and 2008 rates over 6%," says Jay Dacey, the Minnesota mortgage broker who handled Metz's refinance.

Refinancing in an uncertain era

As the recession eases, and the U.S. gradually stops propping up the mortgage-backed securities market, interest rates may rise from last year's bargains. Last week, Boston Federal Reserve President Eric Rosengren predicted rates could increase three-quarters of a point as early as this spring.

Refinancing also may offer a welcome antidote to homeowners suffering symptoms of a recession hangover: debt, job insecurity, or short-term adjustable-rate mortgages about to reset to higher rates.