Tune in to the radio or watch TV in the evening and you’ll be bombarded with commercials offering incredibly low interest rates to refinance your home. These rates may sound enticing, and you may be wondering if it’s time to refinance your home loan. While refinancing can make financial sense in some situations, not everyone will benefit.

Most people consider refinancing to lower their interest rate. Even a slight change in the interest rate may add up to significant dollars over the life of the loan. When evaluating the new loan, remember to add in any additional costs. Ask if you will be responsible for closing costs or appraisal costs before jumping at a lower rate. The length of the loan is also important to review. Are you restarting the clock on a 30-year mortgage? It’s recommended to not refinance for longer than the years remaining on your current loan.

One great reason to refinance is to eliminate PMI (private mortgage insurance) or convert from a variable-rate loan to a fixed-rate loan. First-time borrowers may have had limited options for the original loan. But now with more equity and perhaps stronger credit, a refinance can put these borrowers into a better loan. A refinance can also offer a way to consolidate higher-interest debt by pulling money from the home to pay off credit cards or car loans. 

Refinancing offers are everywhere. It may be a great time to take advantage of lower rates and lock in savings. Remember to consider all the costs associated when you are thinking about refinancing, before assuming it’s a good financial decision.