Refinance 101:

Examining the Benefits of Refinancing

• Examining the benefits of refinancing
• Buying a home
• Understanding your credit
• Bi-Weekly payments?
• Additional Resources

There are a number of reasons to consider refinancing the loan on your home. Some people refinance as a way of taking advantage of lower interest rates, enabling them to reduce their monthly mortgage payments. Some refinance to a shorter-term mortgage, which enables them to build equity in their homes faster. And some homeowners refinance to tap into the equity they've accumulated in their houses, using the funds for home improvement or other needs, such as debt consolidation or their children's education.

Do you want to take advantage of these benefits, but wonder if refinancing will be worth the time and money you'll need to invest? Do you feel unsure about the entire refinancing process?

Don't worry. The refinancing process is very simple. It involves paying off your existing mortgage loan and taking out a new one on the same house. Your new mortgage loan could be at a more attractive interest rate, or for a different term. Or, you could get an entirely different type of loan — for example, you could switch from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage.

If it's been a few years since you got your current mortgage loan, you may need to refresh your memory about some of the terminology used on these pages, so be sure to refer to our glossary of mortgage- and lending-related words and phrases. Look through the Buying a Home section of our site for a more-detailed description of the importance of your credit, your loan options, and the mortgage process. And take advantage of our tools and calculators — including our Refinance Calculator — to test the anticipated effect of different scenarios and different loan options on your financial future.