And why you would?
Lowering Your Payments
Are getting reduced monthly payments and a lower rate your main refinance goals? If so, applying for a low, fixed-rate loan might be a good choice for you. Perhaps you are currently in a mortgage loan with a high, fixed interest rate, or a mortgage loan in which the rate of interest varies – variable rate mortgage (VRM). Even when rates come up later, unlike with your VRM, when you close a fixed rate mortgage, you set that low-interest rate for the term of your loan. If you are planning to stay in your home for at least five more years, a fixed rate mortgage may be a particularly good fit for you and even if you choose to move there are mortgages which are portable and you don’t have to pay the penalty.
Getting Out some Cash
Is “cashing out” your primary purpose for refinancing? It could be you’re planning a special vacation; you need to pay college tuition for your child, or you plan to renovate your home. In this case, you’ll want to apply for a loan higher than the remaining balance of your current mortgage. With this goal Your mortgage payment may be even lower than your current one, why wouldn’t you do it?
Perhaps you’d like to cash out some of the equity in your home (cash out) to put toward other debt. If you have any debt with higher interest (like credit cards or vehicle loans), you might be able to take care of that debt with a lower rate loan through your refinance, if you have the right amount of equity.