Re-financing Home Mortgage

[Halon]

I have 3 people I know now that have recently refinanced their home loans. They all said they were given a couple options.

For example say their current rate was 6% interest. They were given an option to lower to something like 5.2% for free basically. No closing costs, no fees, nothing. They were also given an option to lower to something like 4.9%, but in that case they'd have to pay closing costs, or have the closing cost added to their loan. They all took the 5.2% option as it was free. Basically just a new loan, at lesser interest, no fees, done deal.

So I just called my lender (TCF) and asked about this. In my case my loan is 6%, and tha actual amount is probably about $5000 more than my house is worth (due to housing market situation). So he didn't sound too optimistic that I would be able to refinance to a lower rate.

Anyone have any experience with this? I was kind of suprised, because I thought there are tons of people like me who actually owe more than their house is worth now, and so I didn't realise that was going to be a big issue as I thought tons of people are in my same shoes.

So I don't really get it. I will hear back in a couple days, but now I don't feel too optimistic. Kinda bummed because after hearing what these other people did, I was looking forward to possibly getting somewhat of a better rate.