One of the most obvious  finansiering og refinansiering benefits of is a reduction in interest rates, which can significantly reduce your monthly payment and result in thousands in savings over the life of your loan. Refinance lenders use a combination of factors, including your credit score and loan-to-value ratio, to determine your new rate.

Refinancing can also help you shorten your loan term, which will enable you to build home equity more quickly and pay less in total interest over time. This may be a good option if you think you will move or sell your home before the end of your 30-year mortgage term.

Understanding Unsecured Loan Regulations: Stay Informed Before You Borrow

Mortgage refinancing is often a complicated and lengthy process that can be costly. Closing costs typically run from 2% to 5% of the loan amount and can include such items as an appraisal, title search, application fee and loan origination fees. It’s important to consider how long it will take for the savings you will receive from your reduced interest rate to offset these expenses.

Another reason you might refinance your mortgage is to tap into your built-up home equity, which can be used for any purpose (such as paying off high-interest credit card debt). This type of refinance is known as a cash-out refinance. Be sure to carefully evaluate the pros and cons of this strategy, as it could increase your loan balance, resulting in more interest paid over the life of your mortgage.