1. Lower your monthly payment
If rates have dropped since you purchased your home, or if you choose a lower-rate adjustable mortgage, refinancing will lower your monthly payment, allowing you to save, spend or invest more money each month.
2. Get Cash out of your equity
Once you have built up enough equity in your house, a "cash-out" refinance can give you money to invest or to use for a vacation, college tuition, home improvements or a major purchase.
3. Get into a fixed rate loan
If you have an adjustable rate mortgage and worry about your interest rates and payments increasing, a refinance could move you into a fixed rate loan, giving you predictable fixed payments until your loan is repaid. Or, if rates have dropped since you financed your home, refinancing into a fixed-rate loan would guarantee you low rates and payments for the remaining life of your loan.
4. Consolidate debt
Refinancing can help you recover and gain control of your personal debt. In the process of refinancing, you may be able to pay off other debts and consolidate all your debt into one mortgage loan, thereby significantly decreasing your interest on credit card debt. You may also be able to take a tax advantage on more interest by consolidating your debts into a mortgage.