7 Good Reasons for a Mortgage Refinance

Convert an ARM Stability-hungry borrowers are ditching adjustable-rate mortgages and refinancing into fixed-rate loans."Everybody's frightened about inflation, so if they have an adjustable loan, that's the No. 1 reason they're getting out of them," says Jeff Lazerson, president of Mortgage Grader, a lender based in Laguna Niguel, Calif. "It's not because you can get them at a better rate, but because you can get them at a stable rate."Other borrowers swing from one hybrid ARM to another, says Matt Hackett, underwriting manager for Equity Now, a direct mortgage lender based in New York City."We've done a few of those for people who were in a five-year ARM that they originated four years ago, that was getting ready to adjust," Hackett says.Even though the rates were about to adjust downward, they got new 5/1 ARMs to extend low rates another five years.

Get a Mortgage on a Paid-Off House

This isn't, technically, a refi, but it's close. Mortgage-free homeowners sometimes get mortgages to put cash in their pockets.

"There's a lot of people who don't have a mortgage," Hackett says. "Maybe they want to go to Florida, buy a second home with cash. So they cash out their first home and take the cash and go down there and don't need a financing contingency, and they're in a better position to bargain."

They could also take out a mortgage on a paid-off property to start a business or for other reasons.

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