refinance

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

|Updated on: 10 Aug 2018

Definition of refinance

refinanced; refinancing; refinances

transitive + intransitive

: 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

See refinance defined for English-language learners

Recent Examples of refinance from the Web

Even so, rising home prices are increasing, and parents could borrow against the house or refinance to take cash out of the home, too.

— susan tompor, Detroit Free Press, "Students aren't the only ones crushed by school debt," 11 July 2018
Some owners who refinance and stay put are adding rooms, expanding patios or upgrading kitchens and bathrooms, according to a release from Spectrum Global Financial.

— bill zimmerman, OrlandoSentinel.com, "Refinancing finds niche amid rising prices, even as trend wanes," 27 June 2018
Without refinancing, Hartford would owe $48.6 million next year.

— jenna carlesso, Courant Community, "Hartford Mayor Luke Bronin's Budget Will Face New Scrutiny From Oversight Board," 15 Apr. 2018
To create a better life for their son, the family had borrowed to cover his education, resulting in crushing student loan debt to faceless financial institutions unwilling to refinance to help the family make ends meet.

— krista stevens, Longreads, "The Crushing, Ever-Present Weight of Debt," 10 July 2018
MADISON - After voters decided to keep the state treasurer's position in an April referendum, candidates for the job are proposing profound changes to the office — with one seeking the power to refinance student loan debt.

— max bayer, Milwaukee Journal Sentinel, "Voters kept Wisconsin’s treasurer position but what’s next?," 6 July 2018
Others are using refinancing to pay off debt, said Grant Simon, branch manager at Fidelity Bank and a former mortgage broker.

— bill zimmerman, OrlandoSentinel.com, "Refinancing finds niche amid rising prices, even as trend wanes," 27 June 2018
Goldman Sachs, a bank, goes further, estimating that introducing new products such as the Model Y, a smaller SUV, and an electric lorry, together with refinancing debt, will require raising $10bn by 2020.

— The Economist, "As Tesla’s share price falls, it becomes an inviting takeover target," 26 May 2018
The district's bond attorneys have also been aggressive in refinancing outstanding debt at lower interest rates, much due to the district's sterling bond and credit rating.

— bob warren, NOLA.com, "St. Tammany Parish School Board signs off on tax cut," 24 May 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