What is refinance?
A loan (debt) might be refinanced for many reasons, such as:
-To take advantage of a better interest rate, which reduces the monthly payment or the term of the loan.
-To combine other debt(s) into one loan, most likely a potentially longer/shorter term with some difference in the interest rate.
It is replacing an existing debt commitment with a debt commitment under different and terms and conditions. The terms and conditions of refinancing may vary by state, based on projected risk, inherent risk, currency stability, political stability of a nation, banking regulations, and borrower's credit. In most cases, refinancing is usually for a place of primary residency mortgage.
Refinancing for the second, third, or fifth reason are usually taken advantage by borrowers who have financial difficulty or just want to spend less money on their monthly payment on their mortgage
-To reduce the monthly repayment amount.
-To reduce or adjust risk; where in most cases are switching from a variable-rate to a fixed-rate loan.
-To get cash from your loan if you have equity.