refinance

verb, transitive + intransitive re·fi·nance \ ˌrē-fə-ˈnan(t)s , (ˌ)rē-ˈfī-ˌnan(t)s , ˌrē-(ˌ)fī-ˈnan(t)s \

Updated on: 21 Apr 2018

Definition of refinance

: to renew or reorganize the financing of something : to provide for (an outstanding indebtedness) by making or obtaining another loan or a larger loan on fresh terms

refinance a mortgage

With rates tumbling, pay a little more now and retain the flexibility to refinance again next year.
—Daniel Kadlec

Recent Examples of refinance from the Web

The college is also using the proceeds to demolish its Wax Academic Center, to build a parking deck, and to refinance previously issued debt.

— john laidler, BostonGlobe.com, "Endicott College updating Beverly campus," 5 Apr. 2018
Mayor Luke Bronin said the city would also refinance its debt, bringing payments down to about $35 million a year, and that the state would assume those annual contributions for about 20 years.

— jenna carlesso, Courant Community, "Connecticut Republicans Angered By Bailout Deal Threaten To Cut Aid For Hartford," 29 Mar. 2018
By 2022, $4 trillion of business borrowing is due, according to S&P. Some of that will have to be refinanced, likely at higher rates.

— tom hudson, miamiherald, "New Federal Reserve head steps onto tightrope when he meets the press | Miami Herald," 16 Mar. 2018
Under those conditions, companies with large short-term debts have to refinance when borrowing costs are rising, said Steven Ricchiuto, chief economist at Mizuho Securities USA.

— daniel kruger, WSJ, "Why Bond Investors Aren’t Worried About Corporate America’s Rising Debt Load," 10 Mar. 2018
For years, the retailer was able to refinance its debt and delay a reckoning.

— claire zillman, Fortune, "Toys 'R' Us Is Considering Closing All of Its U.S. Stores Amid Bankruptcy," 9 Mar. 2018
For years, the retailer was able to refinance its debt and delay a reckoning.

— lauren coleman-lochner, latimes.com, "Bankrupt Toys R Us may sell assets and close all U.S. stores," 9 Mar. 2018
The loan was used to refinance a Chicago skyscraper that is the Midwest headquarters for AT&T. Kushner also still holds a stake in the entity that owns the Brooklyn buildings and received the loan from Citigroup.

— author: jesse drucker, kate kelly, ben protess, Anchorage Daily News, "Kushner's business got loans from companies after White House meetings," 1 Mar. 2018
That debt will need to be refinanced as interest rates are rising.

— steven mufson and emily rauhala, Houston Chronicle, "Dow Jones index ends wild week by climbing back past 24,000," 9 Feb. 2018

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'refinance.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

First Known Use of refinance

1995

in the meaning defined above

See Words from the same year

NEW! Time Traveler

Financial Definition of REFINANCE

refinance

verb

What It Is

Refinance refers to the replacement of a debt with new debt bearing different terms.

How It Works

Financing involves borrowing a specific amount of money over a length of time at an agreed-upon interest rate. Payments on the debt are divided between interest and principal. If circumstances change, for example, the length of time needed to repay the debt is longer and the lender agrees, the loan may be refinanced, extending the term and lowering the period payments (because they are extended over a longer period of time.) If interest rates change, the debt may be refinanced using a lower interest rate.

For example, the $150,000 loan below is shown with a term of 15 years at 8% per year. By year 5, the market interest rate drops to 5%. When the loan is refinanced over the balance of the term, for example, the savings in principal and interest payments on the loan will be over 32,000.

Refinancing may also convert an adjustable rate mortgage to a fix rate mortgage, reducing the interest rate risk to the borrower.

Why It Matters

Refinancing may be restricted on debts containing "call provisions," requiring a penalty payment in the event of a refinancing. In addition, a refinancing usually requires a closing and transaction fee that may be expensive. As a result, it is important to calculate the present value (the value in today's dollars) of the savings and compare it to the closing costs of the refinancing.

Source: Investing Answers