Why do you need equity in your home to refinance your mortgage?

by danielmoyle

Question by Dark Magician: Why do you need equity in your home to refinance your mortgage?
I understand equity is value you have built up in your home by making loan payments but why is it required to refinance? Is it because lenders want to see you are in the process of paying off the loan instead of simply refinancing frequently?

Thanks

Best answer:

Answer by dreamgirl
They want your new loan to be less than what the property is worth in case they have to repo it.

What do you think? Answer below!