Current interest levels are the lowest they've been for a long time. And for those of you who waited, and waited and waited for rates to drop again, well, this might just be the time.

But how do you pick the right interest rate?

There's no perfect answer, but by comparing interest rates to the required discount points and origination fees it becomes a little easier to decide which combination of points and fees are right for you.

Usually, the drop in lower payment isn't sufficient to recover the closing costs associated in a short enough period of time. Secondly, many refinance transactions these days are for loans just 1 to 2 years old, when significant closing fees were incurred during the purchase or refinance. If you refinance more than once in a short period of time, you need to take into consideration closing costs paid on the previous transaction.

In other words, you need to look ahead when refinancing because in a market with declining rates it's possible that you may refinance still again.