By Michele LernerFor most people, the prime reason to refinance a mortgage is to lower their interest rate and monthly payments. While there are many reasons people refinance (more on that later), normally when someone has a low mortgage rate, they don’t refinance into a higher one, says Erin Wood, a financial planner with the Carson Group in Omaha, Neb. Here are a few reasons to refinance your mortgage:To reduce your paymentsThe simplest way to lower your monthly payments is if you can refinance into a lower mortgage rate, which reduces the interest you pay on your loan. Generally, closing costs for a mortgage refinance range from 2% to 5% of the new loan amount. That expense means it only makes sense to refinance if you can reduce your mortgage rate by half a percentage point or more, says Middleman.

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