by 
The Curious Bag
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Refinancing a mortgage is when homeowners replace their existing loans with one that is more favorable to them. Ideally, the longer you plan to live in your home, the more sense it will make to refinance your mortgage.
Purposes
When a mortgage is refinanced, an owner can get a lower interest rate and a restructured term period. Extending the loan to 30 years reduces the monthly payments.
Effects
Refinancing a mortgage can also consolidate debts. It can combine a first mortgage and a home equity mortgage into one fixed-rate mortgage, leveling out the payment over the loan term.
Strategy
Many homeowners with an adjustable-rate mortgage (ARM) refinance when their interest rates and monthly payments begin to rise. Refinancing their loan switches them over to a plan in which rates will not rise.
Considerations
To reap the full benefits of refinancing, it is best to do it after you have built up a considerable amount of equity in your home.
Warning
Refinancing your home can be a great financial strategy, but it is not always the best one. It is important to carefully asses your personal situation to make the right decision, such as whether the closing costs eliminate the benefits.
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