top five reasons why people refinance:

1. decrease 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 a large sum of money to invest or to use for a vacation, college tuition, home improvements or a major purchase.
   
   
3. fix your rate and end rate adjustment anxiety
   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 regain 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.
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5. get out of debt sooner
   You may be able to refinance your current loan to a shorter term or a bi-weekly payment plan without significantly raising your payment, particularly if rates were high when you bought your home. The advantage here is that you could save thousands of dollars in interest and own your home many years earlier than you would otherwise.
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time frame

Most sources say that it takes at least three years to realize fully the savings from a lower interest rate, given the costs of the refinancing. Know your time frame. It is possible that a very brief time frame will make refinancing irrelevant to your situation. The answer to this question will more often help you determine what type of mortgage would be best for you.

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