There are many reasons to refinance a current mortgage on a home. For the savvy homeowner, the right refinancing option could save them thousands of dollars either right away or over the course of the loan or even both. However, not all refinancing options make a great deal of sense to all people. Here are a few things to consider when researching refinancing options for your home.

Is it worth it to you to refinance your home? There is no doubt that many homeowners can certainly benefit from refinancing their home for many reasons including getting a better interest rate, prolonging the terms of the loan for a longer payment, and cashing out available equity for other large purchases. However, to other homeowners, refinancing just doesn't make sense. Refinancing a home involves the cost of the loan as well as closing costs that can run into the thousands of dollars. Be sure to consider these costs and fees and make sure that the benefits outweigh them.

Points: The term "point" is used to describe 1% of the total of the mortgage loan. Homeowners are often hit with a slew of refinance options that include loans that charge no points but higher interest rates and fees, to more points but lower interest rates and fees. Crunch the numbers of all available scenarios to make sure you get the best deal. You will also want to consider how long you are going to stay in the home when doing this, as a lower interest rate will most likely make more sense if you plan on living there for a while.

Are rates dropping? An interest rate drop of just one percent can be enough to make refinancing your home worth it if you plan on staying in the home. However, be sure to watch how the market is acting, as you don't want to refinance for just one point if the rates end up dropping two or more in the near future.

Do you have a lot of debt to consolidate? Many savvy homeowners have successfully rolled their other expenses into their mortgage to pay them off at the greatly reduced interest rate. These can include student loans, automobiles, boats, and credit cards. One pitfall to watch out for if you do this, however, is that you do not build up more debt to replace the debt that you consolidated out of; a common problem for many homeowners that have used this option.

Are you refinancing just to avoid PMI? PMI (Private Mortgage Insurance) can sometimes be dropped simply by refinancing which restructures your mortgage so that it is no longer needed. However, there are other ways to avoid PMI that may make better sense if interest rates have not dropped enough to warrant the refinance loan alone. Sometimes, PMI can be dropped simply by requesting an appraisal of your property. If it has appreciated enough to warrant the PMI to be removed, then the $300 to $400 that the appraisal cost is a substantial savings to what you would have paid in refinancing costs.