What does refinancing involve?

Refinancing is the process of replacing an existing loan with a new loan, typically to secure better loan terms, such as a lower interest rate or a different repayment schedule. This process often allows borrowers to reduce their monthly payments, alter the duration of the loan, or access additional funds by tapping into their property’s equity. By obtaining a new loan to pay off the old one, the borrower can potentially save money in interest costs, make their payments more manageable, or align their loan structure with their current financial situation and goals.

The other options highlight related concepts like adjusting loan terms or debt consolidation, but they do not specifically capture the essence of refinancing as fully as replacing an existing loan entails.