Refinancing your mortgage can save you serious money. If you bought your home with a high-interest loan, refinancing can lower your monthly payments.

When you refinance, you need to be sure that your new loan is actually going to save you money. Here are three secrets to help you come out ahead on your loan.

1. Pick The Right Kind Of Loan

There are many different kinds of loans, and it’s easy to get overwhelmed with names and numbers. Your lender or mortgage broker should always explain anything you find confusing before you sign any paperwork.

To start comparing loans, you should know this basic difference:

• Fixed-Rate Mortgages have the same interest rate for the entire length of the loan.
• Adjustable Rate Mortgages (ARMs) have an interest rate that changes according to market conditions.

If the current market has low interest rates, an adjustable rate mortgage can be the way to go. But if interest rates go up, your loan payments will go up. Fixed-rate mortgages usually have higher payments, but you don’t face the risk of rising interest rates.

No matter which kind of loan you go with, remember this general rule: You won’t save any money if your new loan has a higher interest rate than your old loan.

2. Find Your “Break-Even” Period

Unfortunately, you can’t just trade your old loan for a new one with a lower payment. When you refinance, you’ll have to pay up-front costs like points and closing fees.

The “break-even” period is the amount of time it takes for the savings of your lower monthly loan payment to cover the closing costs and fees of refinancing. To figure out the break-even period on a loan, divide the up-front costs of the loan by the monthly payment. The result is the number of months that it will take to break even on the cost of the new loan.

If you’re planning on selling the house before the break-even period is over, you probably won’t save any money by refinancing.

3. Shop Around For The Best Deal

Just because one lender has told you that they’ve offered you their “best rate” doesn’t mean you can’t find a better one. You should shop around and compare offers from lenders.

But remember: Too much loan shopping can hurt your credit. To protect your credit, do all your loan shopping within a TWO WEEK period.

The reason? When you apply for a loan, the lender will run a credit check. Too many credit checks over a long period of time looks to lenders like you are constantly being turned down. But any credit checks that show up on your report within the last 30 days are ignored by lenders.

A good way to get all your loan shopping done at once is to get quotes online. An online quote service will get you offers from several competing mortgage brokers. This gives you a better chance of getting a good deal.

Saving money on your mortgage isn’t easy. But it isn’t impossible, either. Use these secrets to make a refinance loan work for you.