Another reason to consider refinancing is to consolidate credit card debt. The interest rates on most credit cards is typically much higher than a refinancing mortgage rate. Credit cards compound interest daily, whereas mortgage interest is compounded monthly. That will add up to huge savings over time and will help make your debt much more manageable. Another benefit to consolidating credit card debt this way is that the interest you pay on a mortgage or home equity loan is tax deductible. So, if you have enough equity in your home and your debt to income ratio is not too high, then refinancing your mortgage would be a good option. However, a word of caution: If you refinance to consolidate debt, then turn around and rack up more credit card debt, your situation will only worsen in the long run. Instead, you should consider making some serious life changes with how you spend your money.
What you must consider before refinancing.
One of the steps to refinancing a mortgage is to find out if the current refinancing mortgage rate is better than your existing one. The best way refinancing will work in your favor is for the new mortgage to have a lower interest rate and a shorter term. If you can't afford the monthly payments on a shorter term, then you will also want to consider how old you will be when the term expires. The last thing you want is to be past retirement age and still paying on a mortgage.
Like most things, refinancing is not free. Most lenders charge closing costs which average $4000. This, of course, can be added to your new mortgage so you would not have to pay up front. But be aware that there may be addition out of pocket fees. If you refinance through your current lender and do not borrow any more than what you currently owe, than you may be able to get the closing costs waived. You will need to carefully weigh your options and compare them to your refinancing mortgage rate to determine what your best long term and shorter term benefits will be.