One of the main benefits to refinancing is to consolidate consumer debt. Consumer debt (i.e. Credit Cards & Auto Payment) is typically at a higher interest rate and is never tax deductible. Interest paid on debt tied to your home is deducted from your income at the end of the year often substantially reducing your tax liability. This tax favorable status is one of the many benefits of refinancing.

Many homeowners with Adjustable Rate Mortgages that have a 2 or 3 years starting fixed rate period need to refinance before the adjustable period kicks in, because when the adjustable period starts, the fully indexed rate, and therefore the monthly payments, of adjustable rate mortgages almost always increase tremendously.

Refinancing your home can save you hundreds per month when you consoidate debt.

What if you want to add on, remodel or update the kitchen? You may not have the cash to do so, but the cost of improvements may be more than covered by the increase in value of the home. This is a great use for a home equity line of credit or a cash-out refinance.

Many people refinance to change from a variable rate to a fixed one or vice versa.
Refinancing a high interest rate after a 24 month good payment history could save you a lot of money on your monthly payment.

If planning to purchase investment property, refinancing your primary residence is a great way to raise the cash for the downpayment required.

Always consider your long term benefits of doing a refinance. The interest rate is not the most important aspect of the transaction. Even if your current rate is lower, you will probably save more money over time with a debt consolidation refinance then you would be with maintaining the situation you are currently in. Ask yourself a few questions:
How long have I had this balance on my cards?
At the rate I am paying my credit card debt down, how long will it actually take to pay them completely off?
What will be my total cost once I have paid off all my credit card debt?

Most people refinance to because of changes in their financial situations. Some, after determining that they can afford a bigger mortgage payment, refinance to a shorter loan term to save on the total amount of interest charges. Others, after experiencing a decrease in income, may refinance to a longer term loan to take advantage of the lower monthly payments. Yet others refinance to withdraw from the equity built in their homes for other financial purposes.

Using equity in your home to pay off high rate loans (credit cards, auto loans, etc.) may have certain tax benefits also. Consult your CPA for more information.

To reduce the term or length of your loan, doing so can save you thousands of dollars in interest.