Refinancing your home maybe your choice for a wide variety of reasons. Some of the most popular ones are to:

• obtain a lower interest rate,
• build equity faster,
• change loan type,
• take advantage of an improved credit rating, or
• draw on equity already built in the home.

Obtaining a lower mortgage interest rate can lower your monthly payment and is the most common reason homeowners refinance. Building equity faster is also a popular reason because owning a home can be one of the safest and most profitable investments you can make.

The option to refinance your home loan for extensions, family growth, planning holidays or a new car is dependent on the equity that you have in your home. Equity simply put means the difference between the valuation of your home and what you still owe to your lender. Even if you don't think that you've paid off any of the principal on your loan, you might discover that the economy has been turning in your favour and the market valuation of your property has gone up without you having to do a thing. What a nice thought!

Another good reason to refinance is to tap a portion of the equity that has accumulated in your home and receive cash at your closing. You can use this equity to pay for expenses such as:

• Your children’s education
• Home improvements
• Consolidate other debts

Apply for a loan for a new home you plan to purchase and see how much you qualify for.