Usually when people talk about refinancing it's for their mortgage. People usually refinance when interest rates are lower. So right now interest rates are about 4.5% depending on your credit score etc. So if you could knock your interest rate down it could save you thousands of dollars over the life of your loan. Like say right now you're paying 8% on a $100,000 mortgage. That means that you're paying about $8000 a year in interest. But if you could knock it down to 4.5% then you'd pay $4500 towards interest. *That was rough math*
Pros: Lower payments and/or interest
You can pull the equity out of your home and use it for other things. Though I wouldn't recommend it.
Better terms and conditions. Maybe you go from an adjustable rate mortgage to a fixed rate mortgage. Or a 30 year mortgage to a 15.
It cost money to refinance. Closing costs, appraisal cost etc.
Hope that helps :)
at 9:03 PM on Jul. 1, 2010