Refinancing

Refinancing means paying off an existing loan, most commonly a mortgage, by taking out a new one, typically to lock in a lower interest rate, change the loan's length, or pull out cash based on the value that's built up. It only makes financial sense when the savings from a lower rate outweigh the closing costs of setting up the new loan, which is why refinancing activity surges when rates fall and dries up almost completely when they're high, homeowners locked into an old low rate have little incentive to trade it for a newer, higher one.