Refinancing is often used to lower your interest rate. If rates have
dropped since you last financed your home, you may want to consider
refinancing. Other common reasons to refinance include paying off a
balloon payment, converting an adjustable rate loan to a fixed rate
loan or to extract cash equity in your home (cash out). A few
reasons for cashing out include: home improvement, an education
fund, and consolidating debt.
Another way to convert equity in your home to cash is a "home equity"
loan. A "home equity" loan is an alternative to refinancing if your
home loan has a very low rate compared to current interest rates or
if you have a prepayment penalty on your loan.