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Getting the initial mortgage in the first place was a lot of work, took a lot of effort, and by no means could it have been considered a lot of fun. Yet the refinance industry is booming, begging the question why do homeowners refinance their loans? Secondly, is refinancing a worthwhile and money saving process?

The answer of course is a definite maybe. Generally speaking, the majority of homeowners refinance their mortgages when interest rates drop and fall below the interest rate they currently have on their home loan. Since the interest rate determines the cost of the loan, it is a money saving idea to get as a low a rate as is possible, and with dropping rates it is smart to seek out cheaper mortgage products.

In some cases the reason why a homeowner might have gotten a less than advantageous interest rate is based solely on a less than perfect credit score. Over time, the credit score might have risen to the level that would make the borrower eligible for a better loan product. When the refinance takes place, the overall monthly mortgage payment is lowered, and this greatly increases the monthly cash flow for the borrower.

Getting out from under the wrong loan product is the second most commonly cited reason for a refinance of a home loan. Lately this has been the case with droves of homeowners whose adjustable rate mortgages threatened to make their homes unaffordable and therefore sought to refinance their homes with a fixed rate mortgage which - although higher in interest than the initial adjustable rate mortgage - promised stability in a market where interest rates were beginning their steady trek upward.

The final reason why homeowners will refinance their existing home loans is for the sake of the equity. Perhaps the home owner needs some ready cash, wants to send the kids off to college, or wants to consolidate debts using the equity of the home; in such cases the cash out refinance option provides an easy way to access a large amount of money in a short period of time.

Lenders have certain restrictions that apply to this last form of refinance; you need to have a certain percentage of equity built up before you can cash out; in some cases you need to have a reserve that will remain in place when the transaction is completed. Since refinance loans vary, it is wise to shop around and understand the restrictions of different products.

Krista Scruggs is an article contributor to Lender411.com. Whether you are looking for fixed mortgage rates, variable adjustable mortgage rates (ARM), jumbo loans,interest only or even specialized mortgages such as bad credit mortgage or reverse mortgages, we will match you with up to 4 qualified lenders with 4 mortgage quotes.