Refinancing?

I hear this term a lot - refinancing? What does it mean to "refinance a home" or "refinance a mortgage"? A few americans I know talk as if refinancing is a basic concept and hence didn't feel like asking them what it means.

Can anyone help me understand what refinancing means? Appreciate your help.

Hi Bharathi,

We bought a house taking a 30-yr mortgage @ 6.125%. After a couple of years, when we came across better rates we did a refinancing with a credit union for 15-yrs @ 5.125%.

Basically what it means is taking a new loan from a financing organization offerring better rates with revised number of years and repaying the earlier organziation with whom you mortgaged. This way you can get better rates and save some money during the transaction.

Hope it helps!