what does it mean when you refinance your home

A mortgage pre-qualification can be useful as an estimate of how much you can afford to spend on your home, but a pre-approval is much more valuable because it means the lender has checked your.

When you refinance your mortgage, your bank or lender pays off your old mortgage with the new one; this is the reason for the term refinancing.. Most borrowers choose to refinance so they can lower their interest and shorten their payment term, or to take advantage of turning some of the equity they have earned on their home into cash.

By Investopedia Staff. A refinance occurs when a business or person revises the interest rate, payment schedule and terms of a previous credit agreement. Debtors will often choose to refinance a loan agreement when the rate environment has substantially changed causing potential savings on debt payments from a new agreement.

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Refinancing means that you pay off your current loan with a new one. People typically choose to refinance in exchange for a loan with better rates that’ll lower their monthly payments and save them money on interest and fees over time.