Alex Featured on Mortgage Vault Podcast

Estimated read time: 4 minutes

One very common reason homeowners refinance is to take advantage of lower interest rates, thereby reducing their monthly mortgage payments. Lower rates can also allow some homeowners to reduce their term – say from 30 years down to 15 – to pay off their mortgage faster.

But what about in today’s market? A lot of people were able to take advantage of buying, or even refinancing, when rates were at historic lows. And the recent steady increase in mortgage rates could leave you wondering why anyone in their right mind would consider refinancing now. The reality is, there are several reasons to consider refinancing, and some could even save homeowners more money in the long run.

Got Equity?

Aside from securing a better rate or reducing their term, another common reason homeowners refinance is to access their equity. While we’ve seen interest rates rise over the past couple of years, we’ve also seen home values increase substantially, meaning some owners may have gained thousands of dollars’ worth of equity. A cash-out refinance allows homeowners to access a portion of that equity, with many programs having no restrictions on how the funds can be used.

The following are just a few of the ways homeowners can use their equity.

Debt Consolidation

Forbes recently reported that the average credit card APR exceeds 20%. That interest can compound and add up quickly for people with high credit card balances. Further, the variable nature of credit card APRs means they can continue to rise over time. Carrying high balances can also negatively impact credit scores. Using equity to pay off high balance, high interest debts can provide a fresh start, may save money, and could even result in improved credit scores.

Repairs & Renovations

Another reason to consider accessing equity via refinancing is to invest in the home by covering costly home repairs or renovations. Roofs, HVAC systems, and windows are just a few of the high-ticket items homeowners must repair or replace periodically, and the cost for any of them can easily exceed $10,000. Thanks to new technologies, system upgrades may even be eligible for certain tax or utility incentives, and can even lead to increased energy efficiency, a reduction in utility costs, and can assist with future re-sale.

With sparse inventory of houses for sale, some homeowners are opting to use their equity to turn their current home into their dream home through major renovations like remodels, room additions, and pool installations. Aging homeowners might also choose to make mobility modifications to their homes, like installing ramps and enabling main level living in multi-story houses, to allow them to stay in their homes longer.

Education Expenses

Paying for tuition and other education-related expenses – whether for themselves, their children, or other family members – is yet another way homeowners might utilize their equity through a refinance. While mortgage rates have increased quite a bit from their lowest point, they still may be more favorable than the interest rates available for some student loans.

Down Payment Gifts

Some homeowners might choose to use their equity to make a gift to their children, grandchildren, or other relatives to enable them to purchase their own homes. Certain loan programs allow gift funds to be used toward down payment and closing costs. Check out our post about using gift funds for homebuying costs to learn more about the requirements of this option.

But I don’t want to lose my rate…

Do you have equity in your home that you’d like to tap into, but are reluctant to give up a super low interest rate? There may be other options available to you. Home Equity Loans (HELOANs) and Home Equity Lines of Credit (HELOCs) allow you to access your equity without refinancing. Check out our recent post to learn more about these two options.


If you’re not sure whether you’re a good candidate for a refinance, contact an Axia Loan Originator. They can provide a complimentary, no-obligation review of your current mortgage and help you determine what course of action is in your best interest, both short- and long-term.

Equal Housing Opportunity. Axia Home Loans is a registered tradename of Axia Financial, LLC. NMLS 27830.