refinance

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

|Updated on: 15 Jun 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

According to Zentella and the Alliance of Californians for Community Empowerment, a tenant activist group, the home was refinanced in 2005 through a pick-a-pay loan from World Savings Bank.

— otis r. taylor jr., San Francisco Chronicle, "To bank, it’s a debt cleared up; to woman, it’s a home lost," 7 June 2018
The house is owned by the estate of Anthony K. Gwynn and was refinanced in 2006, according to county records.

— j. harry jones, sandiegouniontribune.com, "Tony Gwynn's home in Poway foreclosed upon," 2 June 2018
Since refinancing his debt with the federal government in 2015, lowering the rate to 7.25%, Mr. Meru’s balance has grown by $148,948.

— josh mitchell, WSJ, "Mike Meru Has $1 Million in Student Loans. How Did That Happen?," 25 May 2018
If the short-term loan period expires and the debt is unpaid, borrowers can face painful charges or be forced to refinance the loan, creating what consumer advocates see as a debt trap.

— jim puzzanghera, latimes.com, "Tougher payday loan rules issued by consumer protection bureau to remain in place ... for now," 17 May 2018
This isn't an inherently troubling message—for many people, refinancing is indeed the right move—but the promotional approach was less than forthcoming.

— adam harris, The Atlantic, "The Undoing of an Online Student-Loan 'Expert'," 26 Apr. 2018
Another couple's efforts to refinance their home were delayed for three years because of the title defects, the report said.

— robert rhoden, NOLA.com, "Northshore Technical College breaks ground for $4.2 million tech center," 9 Apr. 2018
Look into your repayment options, see about refinancing, get a side gig, and fight for more money at your full-time job.

— maurie backman, USA TODAY, "Women are more than twice as likely as men to struggle with student debt," 13 Mar. 2018
Yildiz Holding, a global confectionary and cookie business owned by Turkey’s richest man, entered negotiations to refinance $7 billion of debt in March.

— New York Times, "Turkey’s Currency Plunges, Potentially Threatening Erdogan’s Re-election Bid," 23 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