refinance

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

Updated on: 26 Jul 2017

Definition of refinance

transitive verb

:to renew or reorganize the financing of

intransitive verb

:to finance something anew

See refinance defined for English-language learners

Recent Examples of refinance from the Web

In certain situations, refinancing the loans in your name is also feasible.

— Washington Post, "Ask Brianna: How do I help my parents pay off college debt?," 22 Aug. 2017
USA TODAY The lowest mortgage interest rates since November did little to encourage people to refinance their home loans or take out a new loan to buy a home.

— diana olick, USA TODAY, "Mortgage rates drop to lowest since election, but borrowers barely budge," 16 Aug. 2017
Scott C. Cox, chairman of the Louisville Arena Authority, said their goal is to refinance the bonds this fall before interest rates increase.

— phillip m. bailey, The Courier-Journal, "New KFC Yum Center deal crosses important hurdle with city," 3 Aug. 2017
Another option is refinancing your loans, wherein a student-loan lender buys your existing loans and gives you a new loan with a lower interest rate.

— gaby dunn, Marie Claire, "3 of Your Biggest Financial Worries—Answered," 1 Aug. 2017
Since last year, Cox has been at the center of negotiations between the city, state and university on how to refinance the Yum Center's $690 million construction debt.

— phillip m. bailey, The Courier-Journal, "Mayor Fischer, Metro Council pleased with KFC Yum Center deal as talks turn to city's part," 20 July 2017
The net loss included a $6.3 million charge from refinancing debt.

— guy boulton, Milwaukee Journal Sentinel, "Agnesian HealthCare and Monroe Clinic reach tentative agreement with SSM Health," 12 July 2017
Because of the way the debt was refinanced in recent years, the city's obligations increased sharply this year and will rise further next year.

— dan haar, Courant Community, "Hartford Debt Dropped To Junk Bond Status By Standard & Poor's," 12 July 2017
If their company can’t find some new scheme for refinancing and redeveloping the property by then, Jared Kushner will have cost his family half a billion dollars.

— eric levitz, Daily Intelligencer, "Kushner Sought $500 Million Bailout From Top Qatari Investor: Report," 10 July 2017

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

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