Taking advantage of current low interest levels to refinance your home means sorting through an avalanche of options. Making good choices to negotiate the best deal without paying more than you have to may seem to require an advanced degree in law. How do you figure out what to buy and what not to buy?

One good way to start is by looking for redundancies to avoid duplicating purchases. You don't want to buy the same thing twice simply because it has two different names. For example, take mortgage life insurance, which promises to make your mortgage payments if you are disabled or die.

Consumer advocates and federal insurance regulators have criticized mortgage life insurance, and warned homeowners that it may not be a good value. Their main reason: If you do not die or become disabled before your mortgage is paid, a mortgage life insurance policy pays nothing. (Contrast that with a standard policy, which pays your policy amount to your beneficiaries when you die.)

The National Association of Insurance Commissioners (NAIC) says that mortgage insurance lenders pay out only about 40 cents in benefits for every dollar consumers spend buying that type of policy, compared with 90 cents on the dollar paid out to consumers who hold regular term life policies.

There is, however, at least one reason some might want to buy a mortgage life insurance policy: no medical examination. This makes it a viable option for homeowners whose health conditions may prevent them from obtaining other types of life insurance.

In general, though, when refinancing, examine your existing life insurance coverage. If it is sufficient to cover your mortgage, you may not need anything more. Or you may want to increase the amount of regular term life insurance you carry.

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