Refinancing is the process of getting a new mortgage to replace your current loan. Many people choose to refinance their loan in order to take advantage of better or different interest rates or terms.
In essence when you refinance, your new loan is paying off your original loan- and your new monthly payment is based on the new rate and terms you are able to lock in.
Refinancing is a popular choice when the current interest rates are lower than the rate you are paying on your current mortgage, or when you are in an adjustable rate loan and you wish to refinance into a fixed rate loan.
One type of “Refi” is a cash out refinance. The maximum loan amount for this type of Refi is 80% of the appraised value of your home. This mortgage product allows mortgage holders to capitalize or “cash in” on the equity they have built in their home and take that equity out. Many people do this in order to remodel their homes.