Are you thinking about refinancing your current home loan? Refinancing does cost money and take time -- so it can be difficult to determine when you want to make the investment. But there are some situations in which refinancing your home loan is clearly the best choice.

1. Your Credit Score Has Improved Considerably

Any time your credit score improves, you may be able to refinance your current home loan. Your credit score is the biggest single determining factor for a home refinance. Not only may you qualify for better mortgage products, but you may also be able to qualify for home lending companies that have preferential terms. Every lender has their own requirements, and the best lenders are often very selective.

2. You Have an Adjustable Rate Mortgage

An adjustable rate mortgage is always a dangerous situation. Eventually, your adjustable rate mortgage will go up -- and you may find yourself unable to afford your payments. Furthermore, you may not always be aware of how high your interest rate will go up. It's always safer to refinance into a fixed rate mortgage as soon as possible.

3. You Need to Complete Home Repairs

A cash out refinance will give you money against the equity that you already own in your home. If you need to complete home repairs, this is usually far more affordable than taking out a personal loan or renovation loan. A cash out refinance will also consider your current home appraisal to determine the amount of equity you own. Thus, if your home has increased in value significantly since you acquired your mortgage, you may be able to get additional equity.

4. Your Mortgage Is Still Fairly Young

Your mortgage interest rate will matter the most in the first ten years of your mortgage. If your mortgage is in its last five years, it may not be as useful. Any time you have a chance to adjust your mortgage interest rate early on in your mortgage terms, you should take it; you can save thousands of dollars over the course of the loan.

5. You Need to Lower Your Payments

If you can't currently afford your existing mortgage payments, a refinance may be in order. Not only can a refinance be used to lower your rates, but it can also be used to extend your term. If you currently have 10 years left on your mortgage, you can refinance to another 30 year mortgage and reduce your payments by over half. 

A home mortgage company can give you more information about whether or not you should refinance your home loan. But, in general, any time you can improve your rates by at least a few points, it'll be worth it later on.