Did you know that according to the Mortgage Bankers Association, the average American refinances his or her mortgage every four years? Here are some of the reasons refinancing may be for you:

1) Reduce Monthly Payments. Refinancing for a longer term will lower the amount of money you pay each month. But, keep in mind that you will end up paying more interest over the life of the loan.

2) Build Home Equity Quickly. Let’s say you receive a substantial raise. Now, you have more money to pay monthly toward your house. You may want to refinance your mortgage with a shorter term loan. The higher payments will enable you to pay your loan off faster, and this will save you interest charges down the road.

3) Obtain a Lower Fixed Rate. If interest rates have dropped since you took out a fixed-rate mortgage, refinancing may greatly reduce your payments.

4) Turn Equity into Cash. Otherwise known as “cash-out refinancing,” many people take out new mortgages with larger principals in order to receive cash for major home improvements or expenses.

5) Switch to a Fixed Rate or an Adjustable Rate Mortgage (ARM). If you are uncomfortable with your current rate, you have the option to switch to a rate that makes your life easier and less stressful.

So is refinancing for you? Use these basics as a starting point. Research the topic in detail, and then decide whether refinancing is something that would be beneficial to your way of life.

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