DEFINITION of 'Refinance'

1. When a business or person revises a payment schedule for repaying debt.

2. Replacing an older loan with a new loan offering better terms.


When a business refinances, it typically extends the maturity date. When individuals change their monthly payments or modify the rate of interest on their loans, it usually involves a penalty fee.

  1. Debt Consolidation

    The act of combining several loans or liabilities into one loan. ...
  2. Bullet Repayment

    A lump sum payment for the entire loan amount paid at maturity. ...
  3. Waterfall Payment

    A type of payment scheme in which higher-tiered creditors receive ...
  4. Second Lien Debt

    Debts that are subordinate to the rights of other, more senior ...
  5. Refunding

    The process of retiring or redeeming an outstanding bond issue ...
  6. Refinance Wave

    A situation where a large amount of mortgage refinancing occurs ...
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  1. What are the best ways to pay off my mortgage quickly?

    There are two main strategies for paying off a mortgage more quickly, which can be used alone or in tandem: making larger ... Read Full Answer >>
  2. When would a corporation want to refinance its debt?

    Favorable market conditions or the strengthening of a company's credit rating may lead to the refinancing of corporate debt. ... Read Full Answer >>
  3. When do I need a letter of credit?

    A letter of credit, sometimes referred to as a documentary credit, acts as a promissory note from a financial institution, ... Read Full Answer >>
  4. Can I take my 401(k) to buy a house?

    Once you reach 59.5, you can use the funds in your 401(k) retirement savings account to buy a house or any other expense ... Read Full Answer >>
  5. Can I use my 401(k) as a collateral for a loan?

    Although federal Internal Revenue Service, or IRS, regulations prohibit using a 401(k) account as collateral for a loan, ... Read Full Answer >>
  6. Why do commercial banks borrow from the Federal Reserve?

    Commercial banks borrow from the Federal Reserve primarily to meet reserve requirements when their cash on hand is low before ... Read Full Answer >>

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