With mortgage rates near record lows, it's an incredibly good time to refinance a home.

Whacking hundreds of dollars a month off your payments not only saves money now, but it could help you avoid foreclosure if you're ever laid off or become ill.

Unfortunately, about half of all applicants are being rejected because they have too much debt, too little equity or insufficient incomes to meet strict new qualification standards.

These 6 smart moves can help you overcome those road bumps and get the loan you need:

Smart move 1. Shop around for the best deal.

For most borrowers, the best deal offers the lowest interest rate on a 30-year, fixed-rate loan without paying points or more than $1,000 in fees.

(Fixed-rate loans are so cheap, there's no reason to even consider an adjustable-rate mortgage.)

The best place to start is the Internet. Our extensive database of mortgage rates, for example, allows you to compare loans being offered by dozens of lenders in your area.

Then ask friends and family members who've just refinanced about the bank or mortgage company they used. And don't ignore local credit unions. They often charge less than commercial banks.

To locate one near you, go to findacreditunion.com and then check their mortgage rates.

Smart move 2. Learn from a rejection.

If you're rejected, you'll receive an "adverse action" letter stating why you were turned down.

Don't get mad -- get busy.

If the appraised value on your home is too low to warrant the size of the loan you need, dig up the cash to make it work or look for other options (see below).

If your problem is a low credit score, you can fix that. To get the best rate, you'll need a score of 740 or better. Our 7 smart moves to improve your credit score can help.

Above all, keep shopping. A rejection from one lender does not mean you'll be rejected by all lenders.

Smart move 3. Not enough equity? Don't give up.

Most lenders won't refinance your mortgage unless you have 20% equity in your home -- a tough criterion to meet if you live in an area where property values have fallen 20% or more.

(To calculate your equity percentage: Subtract the balance on your existing mortgage from your home's current value and divide the difference by the current value.)

You can overcome the equity problem by applying for one of the federal government's three big loan programs. You'll need:

• Just 5% equity to qualify for an FHA loan.
• Zero equity to qualify for a VA loan.
• Less than zero equity -- you can actually owe more than your home is worth -- and still qualify for President Obama's Home Affordable Refinance program.

Smart move 4. Refinance anytime you can lower your mortgage rate by a percentage point or more.

This is a good rule of thumb to follow when deciding whether you've found a worthwhile deal:

Reduce your interest rate by one percentage point and you'll reduce your monthly payments by $65 a month for every $100,000 you borrow.

Our refinancing calculator can help you evaluate any offer more precisely.

It will calculate exactly how much your payment will decrease and how long it will take to recoup any fees and closing costs. A year or less is ideal. Two years or more is too long and indicates the fees are too high for the interest rate you're being offered.

Smart move 5. This isn't the time for a cash-out refinancing.

If you have lots of equity in your home, it can make sense to borrow an extra $20,000 or $30,000 with a low-cost mortgage and use that money to repay credit card bills or other high-cost debt.

But lenders are very reluctant to do cash-out refinancings right now because those loans have been more prone to default and home prices continue to fall in many areas, cutting into the value of their collateral.

Trying to borrow more than you need to pay off your existing mortgage will dramatically increase the odds of being rejected.

Smart move 6. Pay attention to your debt-to-income ratio.

Lenders consider the amount of debt you have to be just as important as your credit score.

They usually want your regular monthly bills to consume no more than 36% of your pretax income.

They'll count all the payments you make on auto loans, student loans and credit cards, as well as alimony, child support and the projected cost of the mortgage you're seeking.

If those expenses consume more than 36% of your income, look for the quickest and easiest ways to trim those costs.

Maybe you can pay off a car loan a few months early, or pay down the balance on a credit card to reduce the minimum payment.

Anything that lowers your debt-to-income ratio to less than 36% will dramatically improve your chances of being approved.

By Carolyn Siegel

Interest.com Associate Editor