In some cases home owners may be able to avoid the costs of refinancing by implementing modifications to their existing loans. Not all companies offer this option, but when refinancing it should be considered and discussed with the lender.

Remember that refinancing, like any type of loan, has additional fees attached. These will typically include some type of application fee, title search fee, attorney fees, appraisal fees and of course the prepayment penalty on the existing loan. The fees are based on the value of the home and will range from a few hundred dollars to thousands of dollars.

It is possible to be "upside down" in any type of loan, including home loans and vehicle loans. This occurs when the amount of the loan actually exceeds the appraised or market value of the item. Refinancing under these conditions is very difficult as the loan amount would have to exceed the collateral value.