For some mortgage debt holders, the sole motive to refinance is to reduce the payment burden of the existing debt, either by obtaining a lower interest rate or by extending the term of the loan.(10) For other homeowners, the decision to refinance reflects primarily a desire to extract accumulated home equity in order to finance the purchase of goods and services, including additional real estate, or to repay other debts.(11) Of course, some homeowners who refinance and liquidize equity may also be influenced by the opportunity to obtain more attractive rates than the ones on their existing mortgage loans.(12) Consumer responses to the Board-sponsored surveys are consistent with these broad motivational distinctions.
On average, consumers who liquidize equity during refinancings borrow about 25 percent of their accumulated equity.