Low interest rates Your savings account may not be helpful, but it is a boon to borrowers. You may be able to reduce your monthly payments and pay off your debt faster by refinancing your mortgage or a car loan at a lower rate, but only if you do it right.

Back in 2010, interest in a 30 year fixed rate mortgage on average 4.69%. In April 2016, the average rate was 3.61% for a 30-year loan and 2.87% for a 15-year fixed rate loan. Average auto loan rates are also about 1% lower than they were five years ago, according to Bankrate data.

A difference of just 1% may not seem like a lot, but it can translate into significant savings. Reducing the rate on your 30-year $ 200,000 mortgage from 4.5% to 3.5% could save you over $ 24,000 over the life of the loan, according to Zillow. You could save over $ 1,000 by refinancing a $ 25,000 auto loan from 5% to 4% and shortening your loan term from 72 to 48 months, according to Nationwide.

Taking advantage of these savings is one of the main reasons people refinance. Others want to shorten the term of their loan to pay off their debts faster, or switch to a loan with more favorable terms. Some may want to withdraw money from their home to pay for other expenses. Whatever your motivation for refinancing, you should enter the process with your eyes wide open. Before you head to the bank, make sure you know how to avoid these seven refinancing mistakes.