refinance

American  

[ree-fi-nans, ree-fahy-nans] / ˌri fɪˈnæns, riˈfaɪ næns /

verb (used with object)

refinanced, refinancing

1. to finance again.

2. to satisfy (a debt) by taking out another loan typically on more favorable terms, as a lower interest rate and reduced monthly payments, or a longer period of time to repay.

   She was able to refinance her mortgage to a much lower 30-year fixed interest rate.

3. to increase or change the financing of, as by selling stock or obtaining additional credit.

   The university issued bonds to refinance the recent construction of a library and dormitory.

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verb (used without object)

refinanced, refinancing

1. to arrange new financing for something.

Usage

What does refinance mean in mortgages? To refinance a loan means to replace it with a new loan typically in order to take advantage of more favorable terms, including a lower interest rate and reduced monthly payments, or a longer period of time to repay. By refinancing a loan, a person or business can free up some cash to use for other purposes. This term is often shortened to the more informal refi.

Etymology

Origin of refinance

First recorded in 1895–1900; re- + finance

Explanation

To refinance a loan is to start the terms over again, usually with a lower interest rate. If you buy a house with a mortgage at a high interest rate, you may be able to refinance later and pay less each month. When you take out a loan from a bank, you always have to pay interest — you agree to pay the money back, plus a certain monthly or yearly percentage of it. If this percentage is high, or the monthly payment is too much, you can sometimes refinance the loan and get new terms that are better. Finance was originally an Old French word meaning "payment" or "settlement of a debt."

Example Sentences

Acevedo said she planned to refinance her loan but learned that she couldn’t because the property had a lien from a previous owner.

From Salon • Apr. 12, 2026

Mortgage rates could eventually decline from current levels, allowing homeowners who bought in recent years to refinance for lower payments.

From The Wall Street Journal • Apr. 9, 2026

Here’s how to know if you should refinance your car loan.

From MarketWatch • Apr. 7, 2026

Fears over AI could make it more difficult for software companies to refinance the upcoming debt.

From Barron's • Mar. 14, 2026

To them the default was a matter of indifference, as they kept none of the risk of the loan; the refinance was merely a chance to charge the borrower new fees.

From "The Big Short" by Michael Lewis