Lower Monthly Payments
Reducing monthly home loan payments frees up resources for investing or paying down credit cards, auto loans, college tuition, or even your principal home loan amount. Lowering your interest rate via refinancing results in a reduced monthly payment and can further establish long-term financial stability
Take Advantage of Home Equity
Because mortgage loans generally have lower interest rates than credit cards do, funds from a refinance enable you to consolidate debt and pay off higher-rate accounts. When you refinance, you can reduce your monthly payment.
Manage a Resetting ARM Loan
If you currently have an adjustable-rate mortgage (ARM) that is about to reset, the interest rate may be changing—likely increasing. Refinancing out of an ARM into a fixed-rate mortgage or obtaining a new ARM with a new fixed-rate period can provide stability and minimize risk.
Thanks to career success or financial windfall, you may find yourself in a stronger economic situation than when you first closed your mortgage. This is why shortening the life of your existing home loan via a refinance might be appealing. While some may choose to continue to pay down (or off) a mortgage balance, others may elect to switch to a new mortgage with shorter and/or better terms.