While these arguments may be true, increasing the number of years that you owe on your mortgage is rarely a smart financial decision, nor is spending a dollar on interest to get a 30-cent tax deduction.

Many homeowners refinance to consolidate their debt.

With mortgage interest rates rising, on the other hand, as they have begun to do, this would be an unwise strategy.

Conversely, converting from a fixed-rate loan to an ARM can also be a sound financial strategy, particularly in a falling interest rate environment.

If rates continue to fall, the periodic rate adjustments on an ARM result in decreasing rates and smaller monthly mortgage payments, eliminating the need to refinance every time rates drop.

It's important to keep this in mind when considering refinancing for the purpose of tapping into home equity or consolidating debt.

Homeowners often access the equity in their homes to cover major expenses, such as the costs of home remodeling or a child's college education.

These homeowners may justify such refinancing by pointing out that remodeling adds value to the home or that the interest rate on the mortgage loan is less than the rate on money borrowed from another source.

Another justification is that the interest on mortgages is tax deductible.It also pays to remember that a savvy homeowner is always looking for ways to reduce debt, build equity, save money and eliminate that mortgage payment.Taking cash out of your equity when you refinance doesn't help you achieve any of those goals.For example, a 30-year fixed-rate mortgage with an interest rate of 9% on a 0,000 home has a principal and interest payment of 4.62.That same loan at 6% reduces your payment to 9.55.Debt consolidation loans allow borrowers to roll multiple debts into a single new one with fixed monthly payments and, ideally, a lower interest rate.