One holiday Blue Light Special appears to be working.

Interest rates are as low as they been since Freddie Mac started tracking them, refinancing applications are soaring and home buys are on the move.

Freddie Mac on Christmas Eve, bless them, said the 30-year fixed-rate mortgage (FRM) averaged 5.14 percent for the week ending Dec. 24, 2008. That's the lowest the rate has been since Freddie Mac started the Primary Mortgage Market Survey in 1971.

The 15-year rate averaged 4.91 percent.

Five year hybrid adjustable rate mortgages (ARMs) were higher at 5.49 percent, but 1-year ARMs were below 5 percent at 4.95 percent nationwide and even lower 4.75 in the Northeast and Southwest.

Talk about visions of sugar plums.

With home prices in a trough, with all the money you've been saving on reduced holiday spending and gasoline conservation, with all those motivated sellers out there twisting in the frigid wind?

It's a good time to consider refinancing your mortgage and it's a good time to be thinking "Buy A Home -- Now!"

Forget settling down for a long winter's nap.

It's obviously time to put on your refinance thinking cap or your buy-a-home lid, not that go-to-sleep winter topper.

Either way, you won't be alone. Jack Frost can't hold a candle to housing consumers who feel the heat.

On Dec. 24, the Mortgage Bankers Association's composite index of mortgage applications to buy a home or refinance a mortgage -- bless it also -- rose to 1,245.4, the highest since 2003, from 841.4 a week earlier. The group's refinancing gauge rose 63 percent and purchases gained 11 percent.

Low rates have you looking to refinance?

The average rates are so low, refinancing can benefit even those who purchased a home a year or two ago, even if they had a small equity stake in their home and used an ARM to buy.

The key, say the experts, is to examine your options.

• Visit your existing lender first, especially if your lender doesn't sell loans and has a vested financial interest in keeping its portfolio intact. It will prefer to refinance you at the going rate rather than cut a loan modification and lose money.

  Also shop around at other banks, credit unions (especially credit unions) and other lenders that also retain loans.

• Trading an ARM for a fixed rate that's slightly higher also isn't a bad deal if that ARM rate will eventually explode with an upward adjustment.

• A 40-year mortgage also can help offset the cost of trading an ARM for a fixed rate, due to the longer term's relatively smaller payments.

• If you have both equity in your home and pristine credit, bargain hard. You have the most options.

• Quickly pull your credit report from the only federally-sanctioned free service, AnnualCreditReport.com and check it twice for accuracy.

• Don't overlook trading one ARM for another, especially if the new ARM is a hybrid that provides enough breathing room, say five or seven years or more before the first adjustment.

• A U.S. Housing and Urban Development-approved counselor, experienced mortgage broker or mortgage adviser can help you quickly sort through options from lenders, bailout programs and other sources to get you a refinanced mortgage -- fixed or adjustable -- that is most viable.

• Examine all potential options by comparing all loan costs of each refinance from a variety of sources -- in-house lenders, secondary market lenders and brokers.

Low rates making you think about buying?

Budget. Know all sources of every penny and where every penny goes. You can't know where you can cut costs until you know in detail what those costs are.

Save. Pinch Pennies. Save More. Being miserly isn't lame. It's a prerequisite to homeownership. If you don't have a savings account worth three to six months of your net income, you are already a financial disaster waiting to happen should there be an emergency. In addition to money for the down payment, lenders today will expect you to have some cash left over for insurance, taxes, maintenance and other costs that come with homeownership.

Don't just get your credit report, read the darn thing. Your credit report is a report card on your credit use -- the good, the bad, the ugly -- and, too often, the incorrect. Which is why you want to see it. If there are errors, follow the instructions to correct them.

Get professional help. Can't determine what your credit report is trying to tell you? Not sure how to calculate what you'll need to save for a down payment? Don't know how to set up a budget? Most consumers don't. It's okay to ask for help. It's smart to ask for help. You don't know everything about buying a home, even if you are moving up, but especially if you are a first-timer. Save the pride for after the purchase.

Whether it's a financial planner, financial counselor, real estate agent, mortgage broker, loan officer, or real estate market nerd, ask family, friends, co-workers and others you trust for references to find those who can help you. Get help in setting goals, sifting through mortgage programs, understanding the title and escrow process, finding a home and keeping a home -- all well before you are actually in the market for a home.

Learn about market and economic conditions that could impact your decision. Learn about home prices, mortgage rates, home buying costs and other issues surrounding what's likely to be your most complicated purchase ever.

Attend workshops, seminars and classes.

Browse for housing information from online content providers, including MyMoney.gov, the Better Business Bureau (search "Tips for Troubled Homeowners") and Deadline Newsroom's home buyers search results.

Pick up a few books, or save some bucks in the library reading "Buying Your First Home" (Nolo, $24.99); "The National Association of Realtors Guide To Home Buying" (Wiley, $19.95) and "Let's Get Real About Money" (Financial Times, $19.99), among others.

Above all -- refinancing or buying -- move fast. The mortgage market is as volatile as it's ever been. Rates could quickly reverse course and head back into Scrooge territory.