Mortgage refinancing has surged this year as interest rates have dropped to the lowest levels since 2016. Rates on a 30-year fixed-rate mortgage averaged 3.6% as of August 15, thanks to tumbling yields on 10-year US Treasury bills. If you are trying to decide whether to refinance…

Go beyond the 0.5% rule. Conventional wisdom says you should refinance if you can get a rate at least one-half percentage point below your existing rate. But that can be a mistake because there are other crucial questions…

Are you facing prepayment penalties on your existing mortgage if you pay off the mortgage ahead of schedule? These penalties may apply in the first three years of a mortgage.

Do you have enough money for closing costs? They’re typically 2% to 6% of the loan balance and include fees for loan origination, application and title.

Do you plan to stay in your home a long time? It will likely take several years of lower monthly mortgage payments to recover up-front closing costs. To figure out your break-even point, go to HSH.com/refinance-calculator.

Be aware that “cash-out” refinancings offer fewer tax advantages now. This popular strategy replaces your ­existing mortgage with a new home loan for more than you owe on your house, allowing you to tap into some of the equity in your home. Under the old federal tax law, the mortgage interest you paid on this home-equity debt (the cash-out portion of the refinance) was fully deductible up to $100,000 regardless of how the money was spent. Under the new tax law, the interest may be deductible only if the money is used for home improvements. ­­