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U.S. Bank logo, Text, Bank Notes.

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When you refinance your mortgage, you replace it with a new one that ideally offers financial benefits.

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Why people refinance their home. One, to save money, two, to spend home equity.

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Homeowners may refinance for one of two reasons. The first is to save money on their mortgage. The second is to spend some of the equity they've built in their home.

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A house with a loan of 5% dropping down. Text, lower interest rate.

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Saving money is probably the most common reason. Many people refinance to reduce the interest rate on their loan.

Securing a lower interest rate can reduce monthly payments and save thousands of dollars over time.

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A house with a loan changing from a 30-year term to a 15-year term. Text, shorter loan term.

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Another way to save money is to refinance for a shorter loan term. Both a lower interest rate and a shorter loan term can help you build home equity faster.

People also refinance to get money to spend. Cash-out refinancing lets you tap into your home equity to access cash.

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A house with cash over it, an arrow points from the house to the cash, then back into the house. Text, Cash-out refinancing.

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Your mortgage gets replaced with a new one for a higher amount than you owe, and the difference is given to you in cash at closing.

Cash-out refinancing could be a good move if you want money for a high-return investment, such as a home renovation, or if you want to consolidate debt.

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Text, Other common reasons to refinance: adjustable-rate to fixed-rate loan and vice versa, eliminate mortgage insurance.

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Refinancing also gives you options to change your loan type and eliminate mortgage insurance.

Take note, refinancing will come with closing fees. A mortgage loan officer can help you decide if the benefits of refinancing outweigh the costs.

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U. S. Bank logo, U. S. Bank dot com slash financial I Q, equal housing lender, credit products offered by U. S. Bank National Association and subject to credit approval and program guidelines, Call your business banker for current rates and terms, Deposit products are offered by U. S. Bank National Association, member FDIC.

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