Business, Legal & Accounting Glossary
A refinance refers to the process of paying off an existing loan, with the proceeds from a new loan. Borrowers often seek to refinance in order to secure a lower interest rate or to lower a monthly payment. The most common refinance type is a mortgage refinance. In addition to lowering rates and/or the associated payment, a mortgage refinance often reduces the term of a loan and/or allows a borrower to switch between a variable and fixed rate. A refinance often consists of the same size loan, using the same property as collateral. In order to determine if a refinance is beneficial, the savings in interest must be compared to the fees associated with the refinance process. An example of a refinance fee is a prepayment fee.
finance To renew the terms of a loan.
Refinancing is the process of replacing an existing loan with a new loan.
Often the new loan is at a lower interest rate reducing the cost of the loan.
Typically one refinances by filling out an application for a new loan. The borrowed funds are then used to pay off the old loan. But note that some loans charge extra fees for prepayment of the loan. These charges can make refinancing more costly than expected.
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This glossary post was last updated: 29th November, 2021 | 0 Views.