What is a mortgage refinance loan?

About refinance mortgage loans

Refinancing a home loan involves paying off the current mortgage loan with a new mortgage loan that usually has a lower interest rate and/or a substantially different repayment plan. Lenders offer a wide variety of refinance options for homeowners.

Equity is the amount of money a home is worth minus the amount of money the borrower owes on any outstanding loans attached to the house. Homeowners can turn to the equity in their homes when they have a large expense or require funds to pay for a home improvement project.

A refinance that results in money being distributed to the homeowners is called a cash-out refinance. Borrowers can often get the best cash-out refinance interest loan rates if ther have an abundance of equity in their home, have excellent credit, and choose the shortest amortization available (for example, a term of 15 years instead of 30 years).