If conditions in your local housing market have increased your home’s value, your equity went up, too. With higher equity, you could get a new loan with better terms. You can also convert that equity into cash to use however you like.
As a general rule, if you can get an interest rate at least half a percent lower than what you’re currently paying, it’s good idea to refi. If you can get more than a percent, it’s a GREAT idea. A lower rate could get you a shorter term, lower monthly payments, savings over the life of the loan, and, maybe, even all three.
In the early part of many mortgages, most of the monthly payment goes toward interest. If you can get a new mortgage that applies more of your payments toward principle, that’s a good thing. You’ll build equity faster, and own your home sooner.