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An extension and/or increase in amount of existing debt.


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.


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.

References in periodicals archive ?
7 billion in net home equity was cashed out from refinancing conventional prime-credit mortgages, according to Freddie Mac.
These results raise questions about why borrowers do not take advantage of refinancing opportunities that would substantially lower their interest payments.
com/California-Home-Refinance-Guide/, there are a large number of resources and tools available to help homeowners become educated on refinancing.
How much lower the interest rate will be on the new loan, after refinancing
More than one refinancing is apparently under audit.
Also, the financial community may ignore some factors that should be considered when selecting the best refinancing strategy to follow.
When a consumer refinances a home loan with a new creditor, or increases his or her financial risk when refinancing with the original creditor, that consumer is entitled to the right of rescission.
Refinancing in the amount of $105,000 for a four and one-half story non-elevatored building containing five Class A apartments located in New York, NY.
The Worleys also spent 54,000 of the money from their refinancing to remodel the basement to accommodate Eric's home office and otherwise enhance the space.
Quite simply, Greenspan is trying to keep a wobbly and fragile economy alive--and using mortgage refinancing to do it.