One of my friend refinanced his mortgage a couple of years ago to convert his high mortgage rate to a much lower one. Also, he had an adjustable rate back then and he switched to a fixed rate, thus, giving him a peace of mind from the unpredictable swing in the monthly payment every year. Anyways, the following are the reasons why people should refinance:

 - To get better loan rates or better terms from your previous one. If you are currently holding a variable rate and the rate is about to reset to a much higher one, then it makes sense to refinance to a lower fixed rate. For example, if you have a 2/28 adjustable rate that started at 2% two years ago and it is about to reset at 8% this year, then it would make sense for you to refinance your mortgage and obtain a loan for 6.15% fixed.

 - To consolidate all your personal debts. If you have equity on your house, you can do a mortgage refinance so you can tap into your equity. If you have personal debts such as a car loan with 9% interest rate, credit cards averaging 15% and other personal loans at 7-10% interest, then it would make sense to consolidate all this loans by refinancing your mortgage. Not only that you are getting a lower interest rate but you are also lowering your monthly payments. And best of all, the interest may be tax deductible. (Please consult with your tax advisor if the interest qualifies as tax deductible). Again, this move is only advisable if your current mortgage terms are not beneficial to you. On the other hand, if you have a very favorable mortgage rate and refinancing will not make sense, then you might need to consider taking out home equity loans instead.