Types

• When you refinance, you can lock in a lower interest rate. However, you can also refinance to change the term of your mortgage to a shorter or longer term, or change from a fixed rate mortgage to an adjustable rate mortgage, or vice versa. In addition, you can do a cash-out refinance, where your refinance is for more than you currently owe so you receive the excess.
  
  

Benefits

• Refinancing your mortgage, especially if you lock in a low interest rate, can save you thousands over the remaining term of your mortgage, especially if you plan to remain in the home for a long time. In addition, with a cash-out refinance, you will likely get a much lower interest rate than you would on other loans types such as credit cards or a personal loan.
  
  

Warning

• Each time you refinance, you will have to pay closing costs. In addition, you may be assessed a prepayment penalty depending on the terms of your current mortgage.