One of the best reasons to refinance is to lower the interest rate on your existing loan. Historically, the rule of thumb is that refinancing is a good idea if you can reduce your interest rate by at least 2%. However, many lenders say 1% savings is enough of an incentive to refinance.
Cash Out Refinance
Cash-out refinancing can provide a significant amount of money at attractive interest rates. When you’re short on liquid cash—but you have equity in your home, refinancing provides a pool of money for home improvements, education needs, and other goals.
Rate & Term Refinance
Rate-and-term refinance is the refinancing of an existing mortgage for the purpose of changing the interest and/or term of a mortgage without advancing new money on the loan. This differs from a cash-out refinance, in which new money is advanced on the loan. Rate-and-term refinances can carry lower interest rates than cash-out refinances.