Refinancing a mortgage means replacing the old home loan moving debt to a different loan or lender. Benefits include saving money and improving cash flow, though refinancing costs and potential loss of federal loan flexibility are important considerations before moving for refinancing.
Reasons to Refinance a Mortgage:
1. To get a lower interest rate and thus, lower monthly payment.
2. To get a shorter term to pay-off the mortgage. Example: replacing a 30-year fixed with a 15-year fixed loan.
3. To get a lower interest rate and a shorter term.
4. To switch from an adjustable-rate mortgage (ARM) to a fixed-rate loan, or vice versa.
5. To extract cash from the home’s equity, also known as a cash-out refinance.