AThe word "refinancing" suggests changing an existing mortgage. But the MBA Web site says: "Refinancing is simply the process of taking out a new mortgage and using the money obtained to close out - - or pay off -- your current mortgage."

Fannie Mae advises, in a refinancing brochure, to look out for ARMs with payment caps rather than interest-rate caps. "While [payment caps] can limit how much your monthly payment increases, they don't restrict the interest rate from going up. . . . As a result, you may end up paying the lender less than the amount of interest you owe each month. If this happens, this unpaid interest is added to your loan balance, and the principal amount you owe increases rather than decreases with each payment. This is called negative amortization -- and generally should be avoided."

Some lenders have "no-cost" and "low-cost" refinancing packages that minimize or eliminate the out-of-pocket expenses of refinancing. But some brokers say they're not exactly zero-cost: The options generally require a slightly higher interest rate, or wrap the costs into the loan. Some brokers prefer to say the packages "have no upfront costs."