If you need to borrow money, borrow money at the least possible interest rate. You will simply save money.
The term refinance means to change the terms of your mortgage or to create a new mortgage. In most cases it is best explained as accessing equity that you have in a property. A refinance generally can help you access less expensive money or money you could not get at all.
A refinance can be for many reasons, here are just a few:
- Free up cash (to invest, purchase vehicle, renovate home…)
- Consolidate debt (bank loans, credit cards, income tax….)
- Get a better interest rate
- Reduce monthly repayment amount
- Change the type of mortgage (i.e., switch from fixed rate to variable rate and vice versa)
- Create access to equity ready at a moments notice (Home Equity Line of Credit)
- Create down payment to purchase another property