Most people refinance to lower their monthly mortgage payments. If rates have come down significantly since you obtained your original loan, you may be able to cut your payments substantially. But there are other reasons to turn in your old loan, too.

Since refinancing means you are taking on an entirely new loan, figure on spending roughly as much as you did to close your original mortgage. You’re likely to be charged an application fee, points, a loan origination fee, a title search fee, a title insurance binder, an appraisal fee and other miscellaneous costs.

Lenders are required by law to provide this calculation to borrowers within three days after applying for a mortgage. This is one way to compare the cost of one mortgage against that of another. But there is a drawback: The figure assumes you’ll hold the loan for the full term. If you pay off the loan any sooner - and most people move or refinance within seven to 12 years - your actual APR will be higher.

Costs: Add up ALL the costs, which could include points, and fees for the application, loan origination, appraisal, attorney, credit report, extra insurance, inspections, private mortgage insurance, recording, survey, title insurance, underwriting and others.

Monthly Savings: Figure your monthly savings by subtracting your current monthly payment from your refinanced mortgage’s monthly payment.

To find the best deal, start with your current mortgage lender. Some lenders have marketing programs designed to retain current borrowers by offering them special low-rate, low- or no-cost refinance packages.

Even if your current lender makes a deal you like, use that loan as a benchmark and shop around for your best deal. To get shopping around help, consider references from family members, co-workers, real estate agents and other people you trust, especially those who’ve recently refinanced.

Next, figure out what you still owe on the house, how much you’re paying each month, and how much you initially paid for the house. Itemize all the expenses of the refinance and estimate your new monthly payments. With this, you can figure out where you break even and when you begin saving money.