By Greg Iacurci,Jessica Dickler

Copyright cnbc

Refinancing any debt generally makes most sense when there’s a spread of at least 1 percentage point between your current interest rate and the new refi rate, said Bankrate’s Kates — for example, if a refi can reduce your mortgage rate to 6% from 7%.

“The bigger that spread is, the better it’s going to be,” Kates said.

For example, homeowners who have a $400,000 fixed mortgage with a 30-year term and 7% interest rate might pay about $2,661 a month. (This includes principal and interest, but excludes factors like insurance and property tax).

The same mortgage with a 6.25% interest rate would reduce their payment by $198 per month, to $2,463. A 5.75% interest rate would drop it by another $129, to $2,334 a month.

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However, refinancing a mortgage too frequently — say, every time interest rates drop 0.25 percentage points — is generally not a good idea, Kates said.

That’s due to closing costs and other fees tacked on to each new mortgage, he said. Repeatedly incurring those costs would erode the financial benefit of refinancing.

“You’re funding your mortgage lender’s kid’s financial education probably more than you’re benefiting yourself,” Kates said.

Consumers should pay attention to the APR — or, annual percentage rate — on a loan, which is inclusive of interest and all fees, Kates said.