Definition of "Refinance"

Lowell  Keene
Lowell Keene Century 21

Modified schedule of debt payments including a mortgage. Creditors may want to refinance one's obligations if he or she cannot satisfy the original payment or if interest rates haven fallen since a borrower took out the loan. For example, whether refinancing is beneficial depends on the refinancing costs including closing costs and the time needed to recover those costs through low mortgage payments. An approximation of the closing costs is using the costs of refinancing (3% to 6% of the outstanding principal) and multiply it by the amount of the loan.

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