Do you want to save money?
A refinance is when you get a new mortgage to pay off your old mortgage.
Usually people do this to get a lower interest rate, and a lower monthly payment.
Or, sometimes people will refinance and pull out some extra money.
They might use this money to pay off other debts like car loans or credit cards.
These people might have their mortgage payment might go up by $100 or $200 per month, but they eliminate $500 – $600 worth of other loan payments.
In the end this can really help their monthly budget !
Do you want to pay your loan off quicker?
Another strategy is to refinance and get a loan with a shorter term.
Perhaps you started out with a 30 year loan a few years ago.
You might refinance and take out a 15 year or 20 year loan, and pay your loan off more quickly.
If interest rates are low enough or if you are getting rid of mortgage insurance, your payment might stay the same as it was on your original 30 year loan.
You continue to pay the same amount, but you shave years off your loan !
How great is that?