With so many factors to consider, deciding whether or not to refinance your home can be difficult. There are many pros and cons to refinancing, and you will want to consult your mortgage loan officer and other resources before you make a formal decision. However, you may not be aware of the many ways that doing so may help improve your life. Here are just five reasons you may benefit from refinancing your home.

1. Shorten Your Loan Term

Depending on the interest rates in your area, you may be able to drastically shorten your loan term without a significant change to your monthly payment; a slight increase in your payments now could pay off drastically in the long term. In some cases, you may even be able to halve your loan term – or more -- by refinancing mortgage, allowing you to pay off your home more quickly and reduce the amount of money you must dedicate towards payments on your current loan.

2. Consolidate Debt

If you have built up equity, you can refinance your mortgage and use the cash to pay off other debts, such as credit card balances or student loans. Choosing a cash-out refinance option will let you get a new mortgage for more than your current balance; you pay off your existing mortgage with a new one for a larger balance and then have access to the additional cash. A cash-out refinance can also help handle significant medical expenses, cover school costs for your children, or fund home improvements and quality of life changes.

3. Secure a Lower Interest Rate

One of the most common reasons people refinance their homes is to receive a lower interest rate on their current mortgage. Generally, people will want to refinance their home only if they can reduce their interest rate by 1 - 2% or more, as this covers the cost of the refinancing while still providing an excellent benefit to you. Getting a lower interest rate has many potential savings, from lowering your monthly payments to increasing the speed you build equity in your home.

4. Change Your Loan Type

Depending on the type of loan you have and the current rates being offered, refinancing to change your loan type can make a sizable difference. ARMs (adjustable-rate mortgages) typically have lower rates initially, but over time the adjustments may increase the rates to be higher than a fixed-rate mortgage. Picking the right time to convert to a fixed-rate mortgage will allow you to have a lower interest rate and also prevent future interest increases in future.

If you have a fixed-rate loan and choose to convert to an ARM instead, you can enjoy a lower monthly payment; this is ideal for people who want to stay in their home for more than a few years and if interest rates are on a downward curve. If you convert your loan, you can reduce your interest rate and monthly payment, plus you will not need to go through the refinancing process every time the interest rates drop.

5. Benefit From Tax Breaks

Depending on how you file your taxes and the type of refinancing you decide to go with, you may be able to access certain breaks or benefits by making itemized deductions on your taxes. For example, if you have a dedicated home office, you may be able to get deductions on your mortgage interest when it comes time to file. Landlords will often get more substantial benefits during tax time as you may be able to deduct business expenses such as closing costs, interest, insurance, and even home improvements.