Whether you’re a new homeowner or have owned your home for a few years, there’s always more to learn about mortgages. Depending on your financial status and your long-term plans, it may make sense to either make larger payments or to refinance your home loan.

Here are some explanations for those difficult “what if?” questions to help you decide when to refinance, when to keep your payments stable and when you might want to increase your monthly mortgage payments.

What Are the Benefits of Refinancing?

We’ve all heard about the benefits of refinancing when under financial stress. For things like student loans and credit card debt, refinancing is often a debtor’s only choice. However, with home loans, the allure of refinancing may not always be a good fit for you.

If your plan is to refinance to get lower mortgage payments each month, you should first question if it will be worth it in the long run, which might amount to paying more in interest. To avoid paying more in interest, refinance after you’ve accomplished important financial milestones, such as increasing your credit score. This makes you a lower risk client to banks and lenders.

When Does It Make Sense to Pay More?

There are benefits of paying off your mortgage in a shorter time. Doing so means less time making payments and less money being spent on interest. 

However, depending on your particular mortgage, you might be better off investing your savings in something that will give you a larger return. Investments in a retirement fund, for example, are likely to pay off to a larger degree in the future. To do the math, calculate the savings you would earn by cutting your mortgage interest and weigh that against projected gains in retirement funds.

Change Lenders

Your relationship with your lender will likely be a long one, so you want to make sure it’s one you’re comfortable with. Once you’ve settled into your new home, scour your resources and ask questions. Who has the best interest rate? Do any have client perks that would benefit you? What do their contracts look like? What is their reputation like among those in a similar position?

Ask lenders for good faith estimates and compare applicable fees. It’s also a great idea to consult friends and neighbors about their experience with lenders, as well as read online reviews to get a better idea of what type of customer experience you can expect.