As we mentioned, there are a variety of reasons why you might want to refinance your existing mortgage. Let’s look at some of the main reasons here.

1. Change Your Loan Term

Many people refinance to a shorter term to save on interest. For example, say you started with a 30-year loan but can now afford a higher mortgage payment. You might refinance to a 15-year term to get a better interest rate and pay less interest overall.

You can also refinance to a longer term to lower your monthly payment.

2. Lower Your Interest Rate

Interest rates are always changing. If rates are better now than when you got your loan, refinancing might make sense for you. Lowering your interest rate can lower your monthly payment. You’ll likely pay less total interest over the life of your loan as well.

3. Change Your Loan Type

A different type of loan or loan program may benefit you for a number of reasons. Perhaps you originally got an adjustable-rate mortgage (ARM) to save on interest, but you’d like to refinance your ARM to a fixed-rate mortgage while rates are low.

Maybe you finally have enough home equity to refinance your Federal Housing Administration (FHA) loan to a conventional loan and stop paying a mortgage insurance premium (MIP).

4. Cash Out Your Equity

With a cash-out refinance, you borrow more than you owe on your home and pocket the difference as cash. If your home’s value has increased, you may have enough equity to take cash out for home improvement, debt consolidation or other expenses.