refinanceJune has been an exciting month for home buyers and homeowners. The average rate on a 30-year mortgage has dropped from 4.23% on May 21 to 3.94% as of June 17; that comes out to a savings of around $270 per year for those homeowners interested in refinancing their current mortgage loans. However, conventional mortgage refinancing isn’t inherently a smart choice. In some cases, it could take a decade or more to recoup the upfront costs. Here are some questions you should ask yourself to figure out if you should refinance.

How long are you planning to stay in your home?

If you’re planning on moving in the very near future, the answer is simple: don’t refinance. Because of the many costs associated with refinancing, you could end up wasting time and money before you recoup them with a lower payment. In layman’s terms: the longer you plan to spend in a house, the more worthwhile a refinance could be.

How much will it cost to refinance your mortgage?

Approximately 63% of homeowners are delinquent in their mortgage payments, which pushes many to refinance without fully understanding the process. For starters, refinancing isn’t free: you’ll need to pay closing costs again (which can include bank fees, appraisal fees, and attorney fees, among other things) in order to secure a lower interest rate. These costs typically turn out to be around 2% of your total mortgage balance. If your new interest rate doesn’t allow you to recoup those fees within five years, it isn’t worth it.

Will refinancing help you with other lifestyle factors?

Sometimes, refinancing might not save you much money but is beneficial in other ways. For example, refinancing can allow you to stop paying private mortgage insurance (PMI), a policy the lender takes out if your loan exceeds 80% of the value of the home; because these are traditionally expensive, eliminating that extra cost could make a big difference. Refinancing also offers a way for you to remove someone from the mortgage, such as an ex-spouse following a divorce.

Don’t race to the bank or your mortgage lender simply because you’ve heard that interest rates dropped significantly. Before you make any major decisions regarding a mortgage refinance, truly take a look at the numbers and your needs.