(Reuters) – With home mortgage rates still hovering around record lows – and they may fall further still – this should be the perfect time to lower your borrowing costs.

Yet with tough standards and more people in a home-equity hole due to the housing slump, it’s difficult to get the best rates. There are some ways to improve your odds and a revamped government program might help, but you’ll have to jump through some hoops to sweeten your loan application.

Mortgage applications are surging, largely due to refinancings. Weekly applications climbed 4.1 percent through December 14, according to the Mortgage Bankers Association. The share of refinancing loans was the highest recorded rate this year.

Since there aren’t too many home buyers around, some 80 percent of mortgage activity is refinancing, according to the Mortgage Banker Association. But up to half of those applying for refis may not qualify, according to LendingTree.com, an online lending exchange.

If you’re looking for a loan and have a low credit score or are buying anything but a single-family home, the odds are you’ll pay higher rates, not the phenomenally low average rate of 3.9 percent for a 30-year, fixed-rate mortgage as of December 15.

How do you get the best deal? Here are some guidelines based on what mortgage brokers are telling me.

– Understand How Loan Underwriting Works.

Since banks and brokers are likely to sell your mortgage to a government-sponsored enterprise like Fannie Mae or Freddie Mac, they have to abide by their tight standards. You need to ask about their “loan level price adjustments” and “adverse market delivery charges.” These are surcharges, expressed in a higher loan rate, for a number of variables. Have less than 15% equity in your home? Then the lender must tack on 0.5 percentage points.

– Credit Scores Are Critical.

If your credit score is 740 or above, you shouldn’t face any surcharges if everything else looks okay and your home equity is 40 percent or better. The lower you go on the FICO scale and home equity stake, the higher the rate. Have less than 20 percent equity with a FICO credit score of less than 620? The lender will add 3 percentage points. It’s hard to find a lender who will give a loan if your credit score is this low.

– What Kind of Property Are You Buying?

Depending again on your equity stake, you can pay as much as 0.75 percentage points more for a condo, 1 point more for a multifamily unit. 0.5 point for a manufactured home and up to 3.75 points for an investment property.

– Are You Getting an Adjustable Loan or Cash-Out Refinance?

The surcharges range from 0.75 to 1 point. Fannie and Freddie are trying to play it safe in their standards and avoid another bubble.

None of these roadblocks should stop you from getting a loan, if you’re pro-active. You can improve your credit record by pulling your credit report and see what you can do to improve your score and put more money down if you have it. You need to see if your credit record is correct. Do you have outstanding loans that have been paid off? Sometimes just fixing errors that would lower your score can help.

In terms of a good benchmark, Doug Lebda, CEO of LendingTree.com, says that a FICO score of 720 and above is a good place to start: “You can take steps to get it there.”

What do you do if you’re underwater on your loan and still want to refinance?

In the interim, Fannie and Freddie recently announced a HARP II program that will allow some underwater homeowners to refinance. But the loans must be owned by the agencies and underwritten before May, 2009. You also may not qualify unless you’re current on your mortgage payments. While it’s too soon to tell if this program is going to be effective, it’s worth a look if you qualify.

“The vast majority of people who want to refinance and are turned down are because of lack of equity,” said Dick Lepre of RPM Mortgage in San Francisco. “HARP 2.0 should help that.”

None of these measures, though, will do much to heal the housing market. There are still far too many foreclosures coming on the market, which will depress prices for years.

Those facing default should either be able to rent to own or be allowed to write down mortgage principal in bankruptcy. Low mortgage rates mean nothing to those who can afford the payments on a home that keeps declining in value.

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The author is a Reuters columnist. The opinions expressed are his own.