When a homeowner refinances their loan it means they will be paying off an existing loan and replacing it with a brand new loan. Here are some popular reasons homeowners refinance a loan:
- To take advantage of lower interest rates to obtain a lower monthly payment.
- To shorten the remaining term of their current loan by refinancing into a shorter term loan like a 10, 15 or 20 year fixed rate loan.
- To convert from an ARM (adjustable rate mortgage) to a fixed-rate mortgage, or vice-versa.
- To access equity in a home to: finance a large purchase, pay down or consolidate higher interest rate credit cards and consumer debt, or to finance a remodel or addition project on a home.
