At some point, you might consider refinancing your home. Doing so may lower your monthly mortgage payments and/or save on interest over the life of your loan. However, refinancing isn’t just about the interest rate—there are costs and risks to keep in mind, too. Here’s an in-depth look at the reasons to refinance, and the pros and cons you’ll want to consider.

Refinancing for another 30-year term after making payments for years and earning equity may lower your monthly payments, freeing up room in your budget for other financial goals.

If interest rates fall after you close on your loan, you could consider refinancing to take advantage of the lower rate. You might save thousands of dollars, depending on the length of time you’ve had your loan and the difference in your current rate and the refinance rate. Still, there are other factors to consider. Speak with your lender for all the details and decide what’s best for you.

If your original loan is an adjustable-rate mortgage (ARM) and your initial fixed term is about to expire, you may want to refinance to a fixed-rate mortgage. Locking in a fixed rate can protect you from rising interest rates in the future. And having the same principal and interest payment every month is easier to plan and budget for. Remember, you still have the option of refinancing for fewer than 30 years (commonly 10, 15 or 20 years).

If you can afford to increase your monthly payments, one option is to shorten your loan term. By paying more over a shorter period of time, you could save thousands of dollars in interest over the life of the loan. You can also pay extra on principal each month and payoff your loan sooner.

As an alternative to a home equity loan, you may qualify for a cash-out refinance. You might need the cash to start a business or pay for a child’s college education. Keep in mind, though, that the cash you take out will cost you more in interest over the life of your new loan, but not necessarily more than other financing options would cost you.