Still thinking about refinancing your mortgage, even though you haven't done so already? It turns out you're not alone.

A recent survey by Fannie Mae found that nearly half of all U.S. mortgage holders - 46 percent - have yet to refinance their home loans despite the record low rates of recent years. And it's not because their applications are being denied - nearly six out of seven borrowers who haven't refinanced have never even attempted to do so.

So why not? Many, it seems, assume that they wouldn't be able to qualify - often wrongly. Others are concerned about the upfront costs. Still others assume they simply wouldn't be able to save enough to make it worthwhile.

If you're still thinking about refinancing your mortgage but are concerned you might not be able to, here are a few things to keep in mind with regard to various things that discourage borrowers from refinancing.

Don't want to extend the loan

This is a big one for a lot of people. They've been making progress in paying down a 30-year mortgage for several years and they don't want to start all over again by refinancing into another 30-year loan, even though it would substantially reduce their monthly payments.

Don't worry. There are other options besides refinancing back into a 30-year loan, or cramming it all into a 15-year mortgage. Twenty year fixed-rate mortgages are a very common product, and many lenders will offer 25-year mortgages as well. If you've had your mortgage for several years and have an opportunity to reduce your rate by a percentage point or more, you can probably refinance into one of those products while either reducing your monthly payment or shortening your loan term, or both.

Many lenders will also allow you to arrange customized payoff schedules that will allow you to keep your same date for paying off the loan that you currently have. In this case, you might refinance into a new 30-year mortgage at a lower rate, but the lender will provide you with an accelerated payment schedule that will allow you to pay it off in 23 years.

Underwater/low equity

With home prices in most areas still well below their pre-recession peaks, many homeowners assume they can't refinance because of a lack of home equity. For most homeowners however, this needn't be a concerned. The federal Home Affordable Refinance Program (HARP) is specifically designed to enable low- and negative equity homeowners refinance their mortgages. Income and credit score requirements are similar to those on regular mortgages.

Some borrowers may shy away from HARP because lenders rejected applicants at a high rate during the program's early years, but new guidelines implemented in 2012 have made it much easier to get approved. In particular, there's no longer any limit to how far underwater you can be on your mortgage and still be approved - it doesn't matter how much your home has fallen in value.

The program is still limited to borrowers with mortgages backed by Fannie Mae or Freddie Mac, although that covers the majority of U.S. mortgages. But if you've got a FHA or VA mortgage, refinancing is even easier. Those programs offer what's called "streamlined" refinancing, which means you can be pretty much automatically approved for refinancing as long as you've stayed current on your mortgage payments, regardless of your equity situation.

Costs too much

Some borrowers don't refinance because they're concerned the closing costs will be too high to make it worthwhile. While this is a legitimate concern, rates continue to be low enough that, if you bought your home any time before the crash, you can still probably reduce your rate enough by refinancing to make it worthwhile.

The general rule of thumb is that any time you can reduce your mortgage rate by a full percentage point on a 30-year loan, it's worthwhile to refinance. The only exception is when you don't expect to stay in the home for more than a few more years, so you won't have time to recoup the closing costs you incur when you refinance.

If you're worried about closing costs, lenders offer the option of rolling your closing costs into the loan itself, either by adding them onto the loan balance or in the form of a slightly higher interest rate. This increase in the rate is usually quite modest and can be a very affordable way to pay your closing costs (and is permitted under HARP), although over the life of the loan it will cost more than simply paying the costs up front.

Lack of savings

This is related to a couple of the previous entries. Some borrowers are concerned that they would have to bring a large amount of money to the table in order to refinance their mortgage. Often, that's because their home has fallen in value and they assume they'll need to make up at least part of the difference in order to refinance. But as noted above, that isn't necessary under the HARP program for borrowers with Fannie Mae or Freddie Mac mortgages, or for a streamlined refinance for FHA and VA mortgage borrowers.

Others borrowers assume they'll need to write a big check at closing to cover the cost of refinancing. While there may be some financial reasons for doing so, it's rarely an absolute necessity. Again, as noted above, borrowers will generally allow you to roll closing costs into your loan balance, or to pay for them in the form of a slightly higher mortgage rate.

Rejected last time

If you're one of the 7 percent of mortgaged homeowners who've previously applied to refinance and been turned down, you may have better luck a second time around. That's particularly true if it's been more than two years since you last applied.

First of all, if you applied for a HARP refinance prior to 2012 and were denied, you should definitely give it another shot. The new guidelines adopted since then have expanded eligibility for the program and provided added assurances for lenders, who have relaxed their own criteria in turn. As a result, 2 million HARP refinances have been approved in just the last two years, compared to only 1 million during the program's first three years.

If you were denied due to a weak credit score and it's been two years or more, you also might want to try again. For most negative items on your credit, like missed payments and delinquent accounts, the worst impacts begin to fade after two years as long as you've resolved the issue and paid your bills on time since then. A major event like a foreclosure or bankruptcy can seriously hurt your credit for 7-10 years, but if your credit blemishes are of the more routine type, you might be in better shape than you think.

If that's your situation, you can order your FICO credit score from the three major credit bureaus - Equifax, Experian and Transunion - to see where you stand. You're entitled to a free copy of your credit report from each once a year, but you'll need to pay for your credit score. You can also sign up for a credit monitoring service, which can be useful if you're looking to rebuild your credit, and which will provide you with credit score updates as well.

Finally, if you were rejected because of your work history or inability to document your income, you might try again if it's been more than two years. Mortgage lenders want to see a history of at least two years in the same line of work before they'll approve a refinance, although it's ok to change employers. If you're self-employed, they'll want to see at least two years of tax returns to prove a reliable income.

Published on November 11, 2011