Doing so allows them to reduce their monthly payment without adding to their total mortgage. Others refinance to a shorter-term loan in order to pay of their home faster. By shortening the term of their loan, the monthly payment goes up and the home is paid for quicker, but much less is paid in interest over the course of the loan.
A third reason for mortgage refinancing would be to take advantage of equity gained in the home. The extra funds gained from a refinance can be used for home repairs, additions, debt consolidation, or children’s education.
Some worry that refinancing takes too much time and money, but fortunately the process is simple. Refinancing is simply the process of paying of your existing loan with a new one.
Your new loan could be for a better interest rate, a shorter/longer term, or a different amount. In fact, your new loan could be an entirely different type. For example, instead of an adjustable-rate mortgage you could opt for a fixed-rate mortgage.