What is a Mortgage Refinance?
Refinancing replaces an existing mortgage with a new loan, usually to adjust rate, term, payment, or equity access.
Getting a new mortgage to replace the original is called refinancing. The first loan is paid off and the second loan is created with new terms. Homeowners may refinance to seek a better rate, change from an adjustable rate to a fixed rate, adjust the loan term, or use available home equity.
Refinancing can be useful, but it should be compared carefully. Closing costs, current loan terms, credit profile, debt, home value, and the amount of time you plan to keep the home can all affect whether a refinance makes sense.
Rate and term
Replace the current loan with a new loan that may offer a different rate, term, or payment structure.
Cash-out
Access available home equity while maintaining ownership of the property.
Cash-in
Pay down principal during refinance to lower loan-to-value or adjust monthly payment needs.
Why homeowners refinance
The current rate environment is often a key reason, but improved credit, long-term planning changes, debt goals, or equity needs may also drive a refinance decision.
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