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As many people look to buy or sell homes this spring, you may be perfectly happy in your current home. But even if you stay put, you might want to look into whether refinancing makes sense for you. Here are some reasons to refinance.

1. You Want a Lower Interest Rate

This is the most obvious one. If you are looking to save money over the term of your mortgage with a lower interest rate, refinancing might be for you. Securing a lower rate can free up money for other items in your budget. You can work on building up your emergency fund, saving for retirement or adding to a college savings account. Rates are still in historically low territory, so if you got your mortgage when they were much higher, it could be a good time to refinance.

Before you sign up, it’s important to run the numbers to make sure that you will be saving enough even when you consider closing costs. This can add up to a large chunk of change, so it’s important to find out what you’ll have to pay and what you’ll get out of it before you refinanace. Depending on how much you pay in closing costs, it may take a few years to break even. This means refinancing will make sense only if you plan to stay in your house longer than that.

2. Your Credit Is Much Better

Perhaps when you purchased your home, you had less than stellar credit. If you have worked hard since then to improve your credit score, you may now qualify for a lower interest rate. Refinancing may allow you to take advantage of that hard work by reducing the amount you will pay for that very same home.

3. You Want to Be Paid Off Faster

Another reason to refinance may actually result in higher monthly payments. That’s because refinancing into a shorter term loan may help you save on interest in the long run. You will build equity in your home faster and own it outright sooner, but your monthly bill will be higher. One reason this may be a good idea for you is that you’ve gotten a raise or bonus that allows you to put more money toward your home each month.

If shortening the term of your mortgage makes you worry that you won’t be able to make payments or that your budget will be too tight, this might not be the time to refinance.

4. You’d Like to Switch to a Fixed Rate

If you currently have an adjustable-rate mortgage (ARM), you can refinance to a fixed-rate mortgage. This can provide more stability to your finances since you will know the monthly cost of your mortgage for the duration of the loan. This is because while a fixed-rate mortgage does not change, an ARM can. With current low interest rates, it may be a good time to lock in and avoid the worry of a fluctuating monthly budget. While there is no guarantee this will save you money, most experts expect interest rates to rise — and so would ARM payments. Examining your different options can keep you from making a refinancing mistake.

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