There are many reasons to refinance. If you have enough equity, you maybe able to take cash out to use for other purposes. If you can afford a higher monthly payment, you may want to refinance to a shorter loan term to save thousands in interest. However, the most common reason is to possibly obtain a lower interest rate and reduce your monthly payments. In this case, the decision to refinance should be based on lowering mortgage costs and breaking even in a reasonable amount of time.