Refinancing depends on your individual situation and what your financial goals are. You may want to lower your interest rate and/or monthly payment, but you need to ask yourself some questions:

• How long do you expect to be in your home?
• How much equity do you have in your home?
• Are you willing to pay points to get a lower rate?

Refinancing a mortgage or loan can lower the monthly payments owed on the loan either by changing the loan to a lower interest rate, or by extending the period of loan, so as to spread the re-payment out over a long period of time. The money saved can be used to pay down the principal of the loan, thus further reducing payments. Refinancing can be used to transform available equity in one's house into ready cash, available for other purposes or expenses.

Another use of refinancing is to reduce the risk associated with an existing loan. Interest rates on adjustable-rate loans and mortgages shift up and down based on the movements of the various prime rates used to calculate them. By refinancing an adjustable rate mortgage into a fixed rate one, the risk of interest rates increasing is removed, ensuring a steady interest rate over time.