To reduce your monthly payment:
Many homeowners refinance in order to reduce the amount of their monthly loan payment. This can be accomplished by reducing your interest rate or extending the length of your loan as part of your refinancing.
To reduce the length of your loan:
If you’re in good financial shape, you may consider refinancing to increase your monthly payment. That can help you pay off your loan faster and with less total interest.
To change the type of mortgage:
Refinancing allows you to change an adjustable-rate mortgage to a fixed-rate mortgage so you can avoid paying higher interest rates. You could also change from an FHA loan to a conventional loan to avoid the extra mortgage insurance that comes with FHA loans.
To get cash:
Refinancing isn’t just for lower rates or term changes. You can tap into the equity in your home with a cash-out refinance. This type of refi replaces your existing mortgage with a loan for more than you owe. In turn, you get access to cash for large expenses such as home improvements, college tuition or paying off other debt.