Refinance
Replacing an existing mortgage with a new one, typically to lower the rate, change the term, or extract equity.
Refinancing pays off your existing mortgage with a new loan on the same property. The new loan may have a lower rate, a different term, a different product type (fixed to ARM or vice versa), or, in the case of a cash-out refinance, a larger balance with proceeds returned to you.
Refinances run through largely the same underwriting process as purchases: application, credit pull, documented income and assets, an appraisal (or a PIW if eligible), title work, and closing. Most close in 25–40 days, though current market volume affects timelines.
The classic question is whether refinancing makes sense. The shortcut answer is to compare the monthly savings against total closing costs and calculate the break-even months. If you'll keep the loan past break-even, the refi pays off; if not, the costs eat the savings.
Related terms
Other terms you'll see alongside Refinance
A refinance that replaces your existing mortgage with a new, larger loan and returns the difference to you as cash.
The percentage of the loan balance the lender charges as the cost of borrowing, paid annually but accrued daily.
The collection of fees and prepaid items, separate from the down payment, that a borrower pays at closing.
A lender's commitment to honor a specified interest rate for a defined period, regardless of market movement.
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