Refinancing simply means paying off your mortgage loan with another mortgage loan that carries a lower interest rate.
For homeowners with mortgage rates that are 1.5 to 2.0 percent higher than current prevailing rates, refinancing can reduce their current monthly payments.
Some homeowners may refinance a home to switch into a different mortgage product. For example, homeowners with adjustable rate mortgages may refinance to get into a more stable fixed-rate mortgage, especially if interest rates are low.
For homeowners with mortgage rates that are 1.5-2.0% higher than current prevailing rates, refinancing can reduce their current monthly payments.
Some homeowners may also refinance to take cash out for home improvement, college education, auto buying, and other. They will refinance at a higher value to repay their existing mortgage loan and take cash out of their home equity for expenditures.