Recently, mortgage rates have hit yet another record low, and it’s no wonder that many Americans have chosen to refinance their home loans. The 30-year fixed mortgage rate is now 3.2% with the refinance rate now 3.3%. Ideally, if you have a home loan and are paying interest over 4%, you should consider refinancing your loan.

Usually, taking the 30-year fixed loan is a smart move since the monthly payments on a 15-year mortgage may be a lot higher. It is, however, suggested that you put the money you will be saving through the refinance into an emergency fund.

If you are considering refinancing your mortgage loan, here are a few things you need to keep in mind.

Determining Your Break-Even Point

Consider how long it will take you to earn back what it will cost to refinance your home loan. You can do this by using online calculators. Refinancing only makes sense if you intend to stay in your home loan enough to reach the break-even point. If you sell your home soon after you refinance your loan, it’s likely you’ll actually end up losing money.

Get the Best Rate

Just because the current rate is 3.3%, it doesn’t necessarily mean you’ll get it.

You need to have a good credit score and debt-to-income ratio, along with sufficient income.

Rates can also vary significantly from lender to lender, so make sure to look around. Start with your current lender to expedite the qualification process, but don’t hesitate to check other options as well.

Watch the Closing Costs

Another factor you should consider is if you can afford closing costs, which include the application fee, title search, title insurance, title fee, and appraisal fee. This typically costs 2% to 6% of your loan amount.

Sometimes, you can refinance your home without any upfront closing costs, but the interest rates usually are higher since the costs are added to the home loan.

Again, look around since the fees can vary. Often, the best way to assess the cost of a loan is to have a look at the annualized percentage rate which is reflective not only of the interest rate, but also the fees that are charged in connection with getting the loan.

You may also get lucky with lower fees if you stay with your existing lender.