Borrowers may consider refinancing for several different reasons:

  1. A Lower Monthly Payment The interest rate on your mortgage is tied directly to how much you pay every month for your mortgage. You may be able to get a lower rate because your credit has improved or because of changes in the market. Lower rates mean lower payments, allowing you to build equity in your home more quickly.
  2. Debt Consolidation Consolidate consumer debt into your mortgage.
  3. Cash out a portion of the home’s equity Generally, most homes will increase in value, and are therefore a great resource for extra income. Increased value gives the opportunity to pay for major expenditures such as home improvements, medical costs, credit card debt, or college tuition.
  4. Shorten your loan Shorten your loan term to own your home and to clear the loan.
  5. May be able to remove mortgage insurance if the value of the home has increased.