Refinancing is the act of replacing a home loan with another, usually more favorable, home loan. Refinancing occurs for a variety of reasons:
- Take advantage of better interest rates
- Consolidate debts into one loan
- Reduce monthly payments
- Secure a fixed-rate loan
Refinancing a loan involves a number of fees including appraisal, title insurance and escrow fees. The decision to refinance must account for these fees to see if it makes financial sense.