What is the primary goal of refinancing a mortgage?

Refinancing a mortgage primarily involves replacing an existing mortgage with a new one, which typically has different terms such as a lower interest rate, changes in the loan duration, or modified payment amounts. Homeowners often pursue refinancing to take advantage of favorable changes in market interest rates, which can reduce monthly payments and overall interest paid over the life of the loan. Additionally, refinancing can allow for alterations in loan structures, such as moving from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage, providing borrowers with more stable and predictable payments.

While increasing equity in the home and consolidating loans can be incidental benefits to refinancing, they are not the primary objectives. Selling the property for profit is a different process entirely and unrelated to the purpose of refinancing. Refinancing is specifically aimed at improving the borrower's financial position through the restructuring of existing mortgage debt.