I had heard that if you can get a rate of 1% lower or more, than your current rate that it would be worth it to refinance.
In order to qualify to refinance, we needed to have at least 20% of the principle balance paid off of the current appraised value (please note, not 20% of what we paid for the house).
The appraiser came out and "inspected" our home and then told us it was worth the same amount as the house that had just sold across the street. Basically, he didn't look at anything except zillow.com to figure out an appraisal . (So if your wondering if you have paid off 20% of your home appraised value, I suggest going to zillow.com and finding a similar house in your neighborhood that has sold recently and how much it sold for).
After having our home appraised, I've learned that you need to discuss upgrades with the appraiser. ( i.e. we have granite counters, we have a pool, a hot tub, a pool heater, a new roof...you get my drift). You want your home to get appraised as high as possible especially if your not sure you have paid down your mortgage 20%.
When discussing different rates with the mortgage broker, decide how long you are willing to stay in the home. We didn't want to commit to staying in this house very long so we didn't choose the lowest rate because the closing cost would be higher. We choose a rate that would only require us to stay in this home for 4 months after the refinance to cover closing costs.
We went from a 30 year fixed at 6% to a 15 year fixed at 4.75%, our payments every month went up $7. In other words, we took 9 years off the length of our loan (because we lived here for 6 years) at the cost of $7 more a month.
We used a company called Quicken Loans. We had a really great experience with them, everything was done online and then they sent a notary to our home and we signed all the papers at our house. We switched from a 30 year fixed to a 15 year fixed loan. They did require us to pay $500 to lock in a rate. So you don't want to call them until you have figured out what percentage of your principle balance you have paid off.
Crown ministries has a bunch of great calculators to help you figure out all this mortgage stuff.
Here is the Link