Mortgage refinancing replaces your current home loan with a new one. People often refinance to reduce their interest rate, cut their monthly payments, or tap into their home’s equity. Others refinance a home to pay off the loan faster, switch from an adjustable-rate to a fixed-rate loan.
When refinancing a home, you get a new mortgage. Instead of the lender paying the home’s seller, it pays off the balance of your old home loan and you’ll pay the lender back based on the amount of your new mortgage.