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An extension and/or increase in amount of existing debt.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.


To repay a loan by taking out another loan. Refinancing can allow one to secure a lower interest rate; for example, one can replace a loan at an 8.5% rate with one at 5.5%. In the case of a balloon loan, refinancing can repay the principal if one does not have sufficient funds to do it; that is, if one has made only interest payments over the life of the loan and has not saved the principal amount when the loan comes due, refinancing can prevent bankruptcy. There are two main drawbacks to refinancing. First, there is no certainty that one will be approved for it. One thus takes a risk every time one decides to make only interest payments on a loan or mortgage. Secondly, refinancing generally resets the repayment period; that is, if one refinances six years into a 10 year loan, the one generally repays the new loan over 10 years instead of the remaining four.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved


Refinancing is the process of paying off an existing loan by taking a new loan and using the same property as security.

Homeowners may refinance to reduce their mortgage expense if interest rates have dropped, to switch from an adjustable to a fixed rate loan if rates are rising, or to draw on the equity that has built up during a period of rising home prices.

Closing costs for a refinance are generally comparable to those for any mortgage. If you're refinancing to reduce your payments, you'll want to calculate how long it will take before you recover the closing costs and begin to save money.

If you're planning to move within a few years, refinancing may not actually save you enough to justify the closing expenses. And if you refinance to use some of your home equity, you run the added risk that prices could drop and you could end up owing more on your mortgage than you could realize from selling your home.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
At most, it can only provide free-of-cost state land to the developers and subsidised mortgage refinance to buyers to keep the prices affordable.
If you use a 30-year mortgage refinance loan and borrow an extra $10,000 to pay off your personal loan, you'd stretch out your repayments for 25 years longer.
The Kenya Mortgage Refinance Company is an implementing arm of government's affordable housing plan aimed at developing the mortgage markets through long-term funding to the mortgage lenders.
"The World Bank has supported many mortgage refinance companies in emerging markets, and Kenya has the right pre-conditions for KMRC to be successful, such as supportive macroeconomic conditions, well-developed capital markets and financial institutions active in housing finance," said Caroline Cerruti, World Bank's Senior Finance Specialist and Task Team Leader for the Project KAHFP is expected to increase access to finance by tripling the proportion of urban households with access to a mortgage.
* $7,100,000--1st mortgage refinance and construction completion of a 5 unit mixed-use building in Mid-town West in Manhattan, NY
He was speaking at the signing ceremony of the Shareholders' Agreement of 'Pakistan Mortgage Refinance Company' (PMRC), at a local hotel in Karachi.'
KARACHI -- Newly established Pakistan Mortgage Refinance Company (PMRC) will provide banks with long-term funding at fixed rates to promote housing finance.
KARACHI -- Adding another accolade to her name, Sidra Iqbal is all set to host Pakistan Mortgage Refinance Signing ceremony in presence of the leading banking fraternity, Governor State Bank of Pakistan and Country Director, World Bank.
ISLAMABAD -- Federal Minister for Finance Senator Mohammad Ishaq Dar Monday chaired a meeting here to consider matters for the establishment of Mortgage Refinance Company.
A credit union caught between a drastic decline in demand for mortgage refinance and an only slowly growing purchase money business has launched an effort aimed at real estate agents to recover its position.
5 (Petra) - A delegation from the Arab Monetary Fund and the European Bank for Reconstruction and Development on Wednesday visited Jordan Mortgage Refinance Company (JMRC) to have a first-hand look at the company's experience in the areas of mortgage refinancing and bond issuance.

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