Answer: If you’re on track saving for retirement and your child’s college education, then the smart thing would be to gut it out and get the property paid off. You’re so close to the end of this loan that the majority of your payments go toward principal. Refinancing might lower your payments, but would dramatically increase the amount of interest you’d pay over time.

If you’re stinting your savings, though, the math gets more complicated. You could view the paid-off vacation home as an asset you could tap later for retirement expenses or college. In that case, getting it paid off on the current schedule would make sense. If selling or borrowing against the home in the future isn’t an option, though, then lowering your payments so you can save for your other goals starts to make some sense.

If that’s the option you choose, consider a 15-year loan rather than a 30-year loan. The shorter loan will still dramatically reduce your payment but you’ll pay about 60% less interest over time.

Changes to the vastly-underused Home Affordable Refinance Program (HARP) could actually help as many as 1.6 million homeowners refinance into a more affordable mortgage. It won’t matter how far underwater you are: as long as you’re employed and current on your mortgage, you can qualify for a refinance. (Current means no late payments in the prior six months, and no more than one late in the past 12 months.) Most importantly, you’re not stuck trying to deal with your current lender. You can shop around.

So many government proposals to help homeowners have fallen so far short that it’s tempting to be cynical about yet another announcement of change. But look under the hood of these changes, and you’ll see that federal regulators are abolishing or at least reducing many of the obstacles that kept a lot of people from taking advantage of some of the lowest interest rates in generations. Estimates of how many homeowners could be helped have ranged from 800,000 to 1.6 million.

Granted, this kind of help should have come a long time ago, but it didn’t. Here’s what you need to know now:

Fannie and Freddie loans only. The HARP program covers only loans for primary residences sold to Fannie Mae and Freddie Mac, the taxpayer-owned mortgage investors that currently buy 90% of mortgages. The new, easier refinancing applies only to loans turned over to the agencies before June 2009. To find out if either agency owns your mortgage, check here at Fannie Mae and here at Freddie Mac. When radio host Bob McCormick and I were answering questions about the program this morning on KFWB, we heard from some investors who were hoping for help with rental properties, but that’s not who the HARP program was meant to serve. FHA, VA and USDA loans are not covered; neither are jumbo loans or “portfolio” loans–those kept by the lender, rather than sold to Fannie or Freddie. You’re also not eligible if you already refinanced under HARP.

LTV limit goes away. Under the current program, you can’t qualify for a refinance is you owe more than 125% of the value of your home (your “loan to value” or LTV), and many of the lenders who bothered wouldn’t make loans if you were over 105%. The new version eliminates the limit, although you still have to have less than 20% equity (if your loan is less than 80% of your home value, you won’t qualify for refinancing under this program).

The refi process is streamlined. Typically, requirements for appraisals and extensive underwriting will disappear. That’s because banks are going to be shielded from “buy back” risk from Fannie and Freddie. The threat that they might have to take the loans back has made lenders extra-careful about the loans they make–which means many loans aren’t being made at all. You’ll need to provide proof of employment or another regular source of income, but you won’t need to pay for an appraisal upfront or submit reams of documentation.

Mortgage insurers are on board. Another obstacle to refinancing is private mortgage insurers that have refused to transfer coverage. These insurers have promised to make transfers much easier under the new HARP rules.

Second mortgage lenders are on board. If you have a home equity loan or line of credit, you’ve typically needed to get that lender’s permission to refinance, a process known as re-subordination. Recalcitrant or overloaded second mortgage lenders have prevented plenty of refinancings in the past, but federal officials say the largest lenders have now agreed to automatically re-subordinate second mortgages under HARP.

Risk fees can be waived. Fannie and Freddie have agreed to waive the fees they were charging for riskier borrowers if those borrowers opted for a shorter-term mortgage than the one they currently have. Refinancing into a 15-year mortgage, then, from your current 30-year loan could save you some dough. If you’ve missed previous refinance opportunities because you were under water and you’re several years into your loan, you may find that your new payment isn’t significantly higher than your old one.

Final details of the changes are scheduled to be submitted to lenders by Nov. 15. If you think you may qualify, line up a chat with a HUD-approved housing counselor (find one here) and get ready to take advantage of a government program that could actually help you stay in your home.

Answer: Refinancing to a 30-year loan can certainly make sense for people who want to lock in the lowest payment and maintain their financial flexibility in the face of possible financial setbacks. You’re also right that this couple seems disciplined enough to make the extra payments to get the loan retired before they do.

However, you missed a key factor: This well-disciplined couple had a mortgage with an interest rate of 5.875%. That indicates they’ve had this mortgage for a while. If they’ve paid down enough of the principal balance, they may be able to refinance to a 15-year loan with a significantly lower interest rate (as in slightly over 3%) without dramatically raising their payments. Many people, when faced with that option, would want to lock in the lower rate.

Answer: The short and obvious answer is that “nothing is the same.”

Home prices are down 33% from their 2006 peak, with even bigger drops in many areas. Lending standards are dramatically tighter as well. When your loan was originally made, lenders might not have cared much if your home’s size or amenities were fudged, or if the wrong “comparable properties” were used to arrive at your home’s value, or if you made the income or had the assets you claimed. Now they care, deeply, about all of those things.

Even if the world hasn’t changed, your property may have. Deferred maintenance could have reduced its value, while improvements may have increased it. Lawsuits or other problems may have popped up that affect the title.

And when you think about it for a moment, you’ll realize that all those loans that were made so easily in the past — with simply a few keystrokes — are what helped lead to the economic mess we’re in today. Yes, the pendulum may have swung too far and made refinancing unnecessarily tough, but the old easy lending standards were simply unsustainable.

Answer: Unfortunately, many would-be refinancers are in your uncomfortable position. They have a second mortgage, such as a home equity line of credit, on their property. These loans are known as “seconds” because the lender is in second position to be paid off when the home is sold, after the primary lender has been paid.

For a refinance to proceed, these HELOC lenders have to agree once again to be subordinated into second position. Some lenders balk because they don’t believe their borrowers have sufficient equity to cover both loans (even though, as you note, a lower payment on the first mortgage could make it more likely that the borrower could make payments on the second).

But a bigger problem seems to be lack of staff and lack of priority. Lenders are so busy trying to meet the demand for refinancing that other concerns, including subordination, often fall to the bottom of their to-do list.

That means you have to be extremely vigilant if you don’t want your refinance deal to fall apart. Call your new lender and your HELOC lender every few days to track the progress of your subordination. If there are problems or missing paperwork, promptly address those issues.

If your rate lock is within two to three weeks of expiring and your subordination still hasn’t been approved, call your HELOC lender and politely ask that your request be given top priority.

If you can’t get through to the subordination department’s main line, ask the phone reps if there is a fax number or e-mail address you can use. If all else fails, take your problem to the bank’s chief executive. You’ll find the name and address online.

That’s great news for folks who still have good credit, a job and some equity in their properties.

If you’re struggling, though, you may find help via a new government Web site that explains the new Making Home Affordable programs.

You’ll find simple quizzes to help you decide if you may be eligible for Home Affordable Refinancing (which can help those who have too little equity to qualify for regular refinancing) or Home Affordable Modification, which can help you keep your home if your payments are too high.

You’ll also find links to HUD-approved housing counselors, checklists to help you get organized and resources to consult for more help.

You may also want to read:

• Refi’ing with a HELOC? Bird-dog your lenders
• When to walk away from a mortgage
• Facing foreclosure? 9 options

If you don’t have enough equity–and “enough” varies by lender–your HELOC lender may refuse to “subordinate,” or agree to stand in the credit line behind your new first mortgage.

That can sink your deal, unless you can pay off and close the HELOC.

Even if you’ve got plenty of equity and great credit scores, though, you can run into problems getting the subordination because the big surge in mortgage refinancing has caught many lenders short-handed. I learned that after sitting on hold with Washington Mutual’s subordination department–for an hour, and I still didn’t get through.

“Second mortgages have been a sticking point through this entire credit meltdown,” said Elizabeth Razzi, Washington Post real estate columnist. Subordinations aren’t a high priority for banks these days, and some lenders have pulled bodies from their subordination departments to work on loan modifications and refinances.

The delays can be so long that you may face losing that great interest rate you thought you had locked in.

For its part, WaMu–now owned by Chase–says it recognizes the subordination logjam and is trying to do something about it.

“Due to increased demand for refinancing, delays in re-subordination are an industry-wide issue,” said Chase spokesman Gary Kishner.  “Both Chase and WaMu are adding staff to handle increase in demand for re-subordinations.”

As a borrower, you shouldn’t sit passively and hope everything works out all right. Instead, you should:

Get the subordination started early. Urge the lender with whom you’re refinancing to submit the subordination request to your HELOC lender right away. Follow up with phone calls to the HELOC lender to make sure the request has been received and processing has begun.

Keep tabs. Call your refi lender and your HELOC lender every few days to make sure your loan and subordination are progressing smoothly. If there are problems or missing paperwork, address them promptly.

Try to elbow your way to the front of the line. If your rate lock is within two to three weeks of expiring and your subordination hasn’t been approved, contact your HELOC lender and demand (politely) that your subordination request be “escalated,” or given top priority.

Find a back door. If you can’t get through to the subordination department’s main line, ask the phone reps if there is a fax number or email address you can use. At Chase, call 877-437-0493.  At WaMu, fax a copy of the rate-lock expiration to 904-462-3643 or email it to subordinationagreements@wamu.net. Kirshner said faxed escalated rate lock expirations will receive an acknowledgement phone call from the representative processing the prioritized request.

Consider a Plan B. Your refinance lender may be willing to give you more money in a cash-out refinance to pay off and close your HELOC. If not, you may be able to pay off the balance by borrowing elsewhere, such as from a 401(k)–but don’t even consider that if your job isn’t rock solid, since 401(k) loans can become inadvertent withdrawals if you lose your job and can’t pay the money back promptly.