You may opt for a mortgage refinancing by taking a new home mortgage and using some or all of the earnings to repay an existing mortgage on his home. The main purpose of mortgage refinancing is to acquire a lower interest rate. Mortgage refinancing also lowers monthly payments by extending the term of a loan. Following are the usual benefits that you stand to enjoy by refinancing.

Reducing monthly payments from a higher fixed rate to a lower fixed rate - If the prevailing interest rate is 7.5% and you switch to a 6.5% rate, you stand to save 1% on the mortgage. This 1% saving can accumulate to over $50,000 on a $200,000 mortgage spread over 30 years.

Improving monthly cash flow with lesser payments - We all face a shortage of cash after moving into a new home. Refinancing can help you switch to a loan with a lesser interest rate. The best way is to switch in to an adjustable rate program where the rate of interest is fixed for three to ten years.

Eliminating variable payment changes of adjustable rate mortgages (ARMs) by switching to a fixed rate program-the interest rates of one-year adjustable rate mortgages (ARMs) are liable to fluctuate substantially. By switching into a fixed rate program at a time when interest rates are lower, you can make your cash flow steady for three, five, or even seven years by refinancing.

Withdrawing funds from the equity in a home - You may refinance 75% to 80% of the current value of the home if you have owned it for one year or more. You can use this extra cash for home improvements, college education, or debt consolidation.