ROANOKE, Va. (WFXR) – Though a small change in interest rates might seem insignificant, it can save you tens of thousands of dollars over the course of a 30-year loan and reduce the size of monthly payments. But, how do you know if you should refinance your mortgage?

Nathan Grant, a senior finance industry analyst for MoneyTips, said, “I think what’s important to remember is refinancing is more of a personal decision that is based on your unique financial situation, your goals, and what options are available to you and not just where the market is at right now. So, when it comes to refinancing, what might be the best timing for one person might not be the best for someone else.”

Grant said there are several reasons to refinance. The most common reason is to take advantage of lower monthly payments. Other reasons include locking in a lower interest rate, making fewer interest payments to allow to pay off the mortgage faster and have better flexibility.

Grant added, “Maybe you got your foot in the door of homeownership with something like an Adjustable Rate Mortgage, where you locked in your rate and it’s kind of been guided by the market. But maybe since then, your personal situation has gotten better, you have a better credit score, you have a better debt-to-income ratio, or maybe you have a lot saved for a down payment. So, if you did want to refinance, those factors are going to help you no matter what’s going on with the market.”

If considering refinancing a mortgage, Grants said you should first review your finances. Make sure you’re in a good position to qualify for the best possible rate and review your debt-to-income ratio and credit score. You should also know the cost of refinancing. Typically, refinancing can cost anywhere between 3% and 6% of the new loan amount and include things like appraisal fees, attorney fees, and more. There are no closing cost refinancing options out there, but homeowners who pursue this option should expect to pay higher interest rates and, in some cases, end up paying more overall. Additionally, calculate the numbers. Grant said because of the costs to refinance, you may not begin to see savings until about a year into the new refinanced loan.