Refinancing is the process of exchanging an existing loan with a brand new loan that has more favorable terms or a lower interest rate. It is commonly done to lower the monthly payments and to make use of the more advantageous interest rates available in the present market. It can also be done for other reasons, such as to switch from an adjustable-rate mortgage to a fixed-rate mortgage, to consolidate multiple loans, to reduce the term of the loan, or to get a lower interest rate. Refinancing can be beneficial for the borrower if done correctly, as it can save them significant amounts of money in the long run.
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Daniel H. Weberman, The Kabinet Founder
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