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Why do people decide to refinance?

You liked your mortgage terms when you bought your house, but that was five years ago. Now you're wondering if you should just go on paying for the full 30 years or if you need to consider refinancing.

To help you decide, take a look at some of the common reasons that people opt to refinance.

Getting a lower rate

Interest rates dropped since you bought the house. You figure you might as well pay less. In some cases, it may be hundreds less, depending on the size of the loan and the amount of rate change. You keep the same house, but you can also free up some extra money in your monthly budget.

Cashing out

The value of your home went up. You're also making more money. You decide to refinance the house, paying off your old mortgage and starting over with a new one for $80,000 more. You can use those funds to add on to your home or make some serious upgrades.

Cutting down the loan's length

You took out a 30-year-mortgage when you bought the house, but now you figure you'd rather not pay for that long. Since interest rates have fallen, you refinance into a 15-year-mortgage. Your payments do go up, but it's less than $100 per month, and you cut your mortgage term in half.

These are just three examples. They may or may not apply to your specific case, depending on home values, current interest rates and much more. Still, they give you a good idea why people refinance, even when they're happy with their loans. If you do want to move forward with refinancing your home, make sure you know exactly what steps to take.

Source: Investopedia, "When (And When Not) to Refinance Your Mortgage," accessed Jan. 22, 2018

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