Refinance
Replacing your current mortgage with a new one, usually to get a lower rate, change the term, or drop mortgage insurance. It comes with new closing costs, so the savings need to outweigh them.
Also called: refi, rate and term refinance, refinancing
Related terms
A refinance where the new loan is larger than what you owe, and you receive the difference in cash. It turns home equity into money but raises your balance and resets the loan.
The percentage a lender charges to borrow money, used to figure the interest part of each payment. It does not include fees, which is why the APR is often higher.
Fees and charges paid at closing on top of the price, such as lender fees, title insurance, recording fees, taxes and prepaid items. Buyers often pay around 2% to 5% of the price; sellers pay their own set of costs.
Paying a lump sum toward principal and having the lender recalculate your payment over the remaining term at the same rate. It costs far less than refinancing, but not every lender or loan type allows it.
A permanent change to a mortgage's terms, such as a lower rate, longer term or added balance, to make payments affordable after a hardship. It is negotiated with the servicer and avoids refinancing.