Just Some of the Advantages of Refinancing

Lower your interest rate. If you see mortgage rates that are lower than your current rate you have, you could see a dramatic improvement in your mortgage payment and your personal budget. Usually, you want to switch to a rate that's at least 1% lower than the rate you have now.

Save with a potential tax write off by refinancing. If you pay points to refinance (fees the borrower pays in a loan transaction), you may be able to deduct this amount over the full term of the loan. If you refinance your debt a second time, all of the taxes incurred directly from the points of the first mortgage refinance (that have not yet been deducted) can be written off in a lump sum. The tax saving could even offset some or all of the costs of the newly refinanced mortgage.

Refinance your mortgae and consolidate your debt. When you refinance, it sometimes makes sense to pay off your high interest rate debt at the same time. You can take advantage of the lower mortgage rate and pay off higher interest rate credit cards, personal loans, or other debts.

Pay the lowest possible interest rate. Of all the loans you have, your mortgage will almost always be the loan with the lowest interest rate. So it makes sense to pay off as much debt as possible using those funds. In doing so, you could be saving yourself hundreds maybe even thousands of dollars every year.

Refinance and say "goodbye" to private mortgage insurance. Say you've been paying your original mortgage for a few years. And now, you have more than 20% equity in your home. Well this is the perfect time to negotiate your terms to 1.) get a better rate 2.) reduce your payments and 3.) get rid private mortgage insurance (PMI).

Make some home improvements. You can "cash out" the equity in your home to make do those renovation projects you've wanted to do and add value to your home in the process. Or you can use the extra cash to pay off credit card debt, pay for college tuition, buy a new car, just about anything you like.

Switch from an adjustable rate mortgage to a fixed rate mortgage. Interest rates have not been this low in years. That's why right now is one of the best times in history to renegotiate your terms to your advantage. Start by changing that tricky adjustable mortgage to a more stable fixed rate mortgage.

Build home equity even faster. When you refinance your mortgage, you can actually increase the rate at which you build equity in your home. If you can shorten the term (from 30 years to 15, for example) you'll pay less in total interest over the life of the new loan.