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Refinance
Mortgage refinancing means taking out a new loan to pay off and replace an existing mortgage.
A mortgage refinance replaces an existing mortgage with a new loan that pays it off. The new loan has its own rate, repayment term, costs, and other conditions.
Refinancing can change the monthly payment or amount borrowed, and it usually involves closing costs and fees. A lower monthly payment can result from a longer repayment term, so it does not by itself prove a lower total borrowing cost.
Source: CFPB: Mortgages key terms.
Frequently Asked Questions
Does a lower payment always mean refinancing costs less overall?
No. A longer loan term can lower the payment while extending repayment. Closing costs, fees, interest, and the term also affect total cost.
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