Should you refinance your mortgage?

Mortgage rates are at an all-time low but should you consider refinancing?

Interest rates on 30-year fixed rate mortgages fell for the sixth straight week, according to the rates tracked by the Mortgage Bankers Association. The Bankrate.com numbers are at the lowest, or closest to, since the company began tracking in 1985. The week of Dec. 2 shows the 30-year fixed mortgage with no points down to 5.01. This is up 5 percent from the week before, however down from 5.97 percent from last year.

The 15-year fixed mortgage rate hit 4.46 percent, down from 4.47 the week before.

Why so low? According to Greg McBride, Bankrate.com’s senior financial analyst, it's a combination of things. The Federal Reserve hasn't given any hints that they are going to increase short-term interest rates. Investors and foreign central banks are continuing to consume debt issued or guaranteed by the United States government at a steady pace.

McBride says, “Today’s record low mortgage rates represent an opportunity for homeowners to refinance at lower fixed rates or to trade out of an adjustable rate mortgage before an inevitable increase in rates and lock in permanent payment affordability.”

McBride points out that there is a "window of opportunity" to refinance, and it will not be available for long, and the government program being offered is soon to end.

A New York Times article reports that these low rates come as many homeowners are finding themselves owing more than their house is worth and are having much trouble making payments.

Looking for a loan modification program? Check out the Home Affordable Refinance Program. The government-sponsored program is set up to help homeowners in serious trouble gain more affordable monthly mortgage payments. The loan is only available until June 2010, and there are specific qualifications. See if you qualify here.

To learn more about mortgages click here.

Tips to save as mortgage rates drop

The beginning of 2009 has brought an increase in mortgage refinances as rates drop and homeowners want to rid themselves of adjustable rate mortgages.

Lower rates may mean that this is a good time to refinance, but lower monthly payments don't always translate into more savings.

When a homeowner begins making payments on a mortgage, typically those payments initially go toward interest and subsequent payments are put toward the principle. As a result, taking out a new loan could translate into more interest.

"Even though your monthly payment is lower, you might be paying more interest over the life of the new loan than you've got left to pay on your old mortgage," Mike Dubis, a Certified Financial Planner tells CNBC here. "Besides that, if you take out another 30-year mortgage, you might be still paying that thing when you're retired. Consider how much interest you'll be paying with a new loan in total, compared to what you've already paid with your old loan.”

One option homeowners have is to take out a mortgage with a shorter term because they tend to come with lower interest rates. For example, last week’s fixed rates were 5.10 percent for a 30-year fixed mortgage and 4.73 percent for 15 years.

Over the course of 30 years, those tenths of a point could add up significantly. In addition, some lenders allow homeowners to take out loans that match the length of their previous mortgages to make refinancing easier.

Click here to learn about Consumer United's mortgage solution.

--Bridget O'Sullivan