Refinancing a mortgage means replacing your current mortgage with a new one, often with a new principal and a different interest rate. The new mortgage is used to pay off the old one, leaving you with just one loan and one monthly payment. There are several reasons why people refinance their homes, including:

• Lower interest rate: Refinancing can help you get a better interest rate and lower your monthly payment.

• Shorter loan term: Refinancing to a shorter term can help you save on interest over the life of the loan.

• Cash-out refinance: This type of refinancing allows you to borrow against the equity in your home and receive cash at closing.

• Remove or add someone to the mortgage: Refinancing can be used to remove another person from the mortgage, which often happens in the case of divorce, or to add someone to the mortgage.

The refinance process involves applying to refinance and providing the same information you gave your lender when you bought the home, such as income, assets, debt, and credit score. There are two main types of refinancing:

• Rate and term refinance: This type of refinancing lets you change your existing loans mortgage rate, loan term, or both.

• Cash-out refinance: This type of refinancing allows you to borrow against the equity in your home and receive cash at closing.

Refinancing can be a good option if you want to save money on your mortgage or meet another financial goal. However, its important to consider the costs of refinancing, such as closing costs and fees, and to make sure you find your break-even point before deciding to refinance your current mortgage rate.