The debt-consolidation refinance program allows a homeowner to combine his or her various outstanding debts into one loan. There are two major benefits of a debt-consolidation refinance: interest savings and tax savings. The homeowner typically saves thousands of dollars in interest by merging high interest debt tools into a loan with a lower rate. The homeowner will also enjoy tax savings because interest paid on a mortgage note is tax-deductible.

The cash-out refinance program allows a homeowner to obtain a loan for more than what is owed on his or her current mortgage and take the difference in cash. For example, if a homeowner owes $75,000 on a home appraised for $100,000, he or she could take the amount left over after factoring in closing costs & prepaid items in cash. The cash can be used for anything, such as college tuition, a dream vacation, or a new car.

Homeowners who have multiple liens against their property may wish to refinance to combine their multiple loans into one. This saves the homeowner time by only having to deal with one lender and only having to make one payment each month. Furthermore, the homeowner is likely to save money if the interest rate on the new loan is lower than the rate on the homeowner’s existing loan.

A rate-term refinance lowers the mortgage interest rate, changes the terms of the loan, or both. For example, a homeowner who currently has a mortgage with an interest rate of 9% may obtain a rate-term refinance to get a new mortgage with a rate of only 6%, thus saving thousands of dollars in interest expense. Another example would be if a homeowner currently has a mortgage with an adjustable rate (thereby paying a different amount each month) and wants a fixed rate instead.