If you've been watching interest rates fluctuate lately, you may be getting the itch to refinance (or possibly, refinance again.) If so, you've probably talked to a lenders, had them crunch the numbers to see if it makes financial sense and maybe even filled out the paperwork.

But wait a minute. Before you take the refinancing plunge, there are two hidden cautions to consider. They impact real estate transactions in general, but somehow have an even greater effect on refinancing. In fact, it is said that they are the two greatest motivating factors in real estate. They are need and greed. Let's explore how they can trip up your refinancing process.

NEED: The first major mistake people make in refinancing is setting unrealistic goals and wanting to win all of the marbles, often losing in the process.

Here's an example. You say, "I'm not going to refinance until fixed rates hit 7% with no points." Unless you have an idea that an interest range and costs associated with that rate are in the realm of possibility, don't wait for a miracle to happen. Ask several lenders how probable it is for interest rates to fall to the rate you have in mind before you decide to wait. And if the costs involved in refinancing are important to you, ask lenders where the rates are for no-cost, low cost refinancing. That will help you be most realistic in determining whether the time is right for you to refinance.

GREED: The second mistake in refinancing is getting too greedy. You rationalize, "Once rates start to drop, they are going to continue to drop. I'm going to be smart and hold out to refinance until they hit bottom!" If you have these powers, we'd love to use your crystal ball! Think of refinancing as 50% skill and 50% sheer luck--it's a gamble. Set a goal of what you want to financially achieve by refinancing. Once rates and points are at that level, lock in your interest rate and go for it. A lender can show you on paper what you stand to gain and can advise you when that's achievable.

Done for the right reasons, refinancing can save you a bundle of interest and put money in your pocket monthly by saving on your mortgage payment. Just don't let need and greed limit what you're able to win!

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