Repaying back your loan leaves you with hardly any cash to fulfill your other needs. The monthly interest payment extracts most of your income. To save you from the exorbitant interest rates, mortgage refinancing offers you a solution where you can repay back your loan as well as save for other expenses.
Often due to favorable market conditions, the interest rates may decrease considerably. Who wouldn't want to enjoy the current lower interest rates prevailing in the market? If you think the interest rate you are paying is excessively high as compared to what it is in the market, it is better too refinance your mortgage.
It can also be possible that initially your credit ratings were not so good to get the loan at a lower interest rate. But over the time, it might have improved and now lenders can offer you loans at much lower rate of interest than what you got earlier.
Refinancing lets you shorten the period of repayment. This will no doubt increase your monthly payments but you will surely save a great amount on your interest payment. And, what else? You would get the ownership of your house in a short span of time. You would also get rid of the burden of the loan soon, which is a great relief.
In case you have enough home equity, you can borrow more than the loan balance that has not been paid yet. You can make use of this money for paying off other debts with higher interest rates, for example, installment loans or credit card balances. Ultimately, you gain out of this as the interest on these loans are non-tax deductible unlike mortgage interests. Therefore, you save considerably.
You can also refinance your second mortgage and combine it with the first one into a single loan. This will reduce the monthly payment, as the payment on the new loan will be much lesser than the joint payments on the first and the second mortgages. Remember, a penny saved is a penny earned and the more you save, the more you are able to fulfill you other requirements. The money saved can be used for personal expenses, sending children to good universities, buy your dream car or just save for meeting future contingencies.