There are a lot of things that you should do when you refinance, but there are only a few rules for things you should not do that you relly need to remember.

1. Never refinance with your existing lender without shopping around with new lenders.

You may be able to get a much better deal with a new lender. Many people think it's easier to work with your existing lender, or that you'll get a better deal; the truth is, working with another lender gives you real leverage. Your lender wants the profits from your loan; he doesn't want to see it go somewhere else.

Your current lender and any new lender will require the same documentation, and will probably have about the same deal. That's because loans are not maintained by your bank; instead, they're sold on the secondary market. And the secondary market will require your current lender to re-verify your assets, liabilities, employment, and credit rating, even if you've never missed a payment.

But if you've been a good customer to your current lender, they may be able to offer you a better deal than a refinancier. When you get your offer, ask your bank if they can match it before signing, at least if you like your bank.

2.  Always do a break-even analysis.

 Find out how much the refinancing will cost you, then look at how much you'll save every month; divide the cost by the monthly savings total to see how many months you'll have to pay your new refinanced mortgage before you break even. For instance, if your total refinance is going to cost you a thousand dollars, but it will save you a hundred dollars a month (with all other things being equal), your break-even point is at ten months. Keep in mind that if you change the loan terms or if you change the length of time you'll be paying the loan off, the break-even analysis gets much more complicated.

3.  Get a good-faith estimate of closing costs in writing.

By law, your lender must give you the GFE within three days of receiving your paperwork.

4.  A full appraisal can cost more than the savings on the refinancing is worth.

Not only will the appraisal cost you money, but if you lose equity on paper, you could find the terms worse than the ones on your existing loan. If you think your home is worth less or not worth a lot, ask for a desk review appraisal from the appraisal company (which is generally at no charge) instead of a full appraisal. From this, you should be able to determine whether you should pay for a full appraisal.

5.  A market-value appraisal of your home is likely to be a different number from the county tax assessor's appraisal.

Mortgage companies use the market-value appraisal. They don't care what the tax office thinks.

6.  Never sign any loan documents without carefully reviewing them.

7.  Never delay providing your mortgage company with requested documents.

This will unnecessarily delay your refinancing, and it could cost you money. It could also result in bad blood with your mortgage company. In a perfect world, that wouldn't matter; but we don't live in a perfect world, and people lose their tempers.

8.  Always lock in your rates in writing.

When the mortgage company says they've locked your rate, get a written statement that includes your interest rate, time period of the rate lock, and all details of the loan program.

9.  Never pull cash from your home equity credit line before refinancing your first mortgage.

This triggers a lender requirement calledcash-out seasoning. If you've pulled cash for anything besides home improvements, the refinance will be considered a cash-out transaction, not a refinance, and that means stricter requirements and even a broken deal. Just wait for the refinance instead.

10.  Never get a second mortgage before refinancing the first one.

Your mortgage company will probably look at both first and second mortgages when it refinances the first one, and this will almost always count against you. If you're going to refinance the first loan, check with your mortgage company about their treatment of second mortgages before you take one out.