What does refinancing a loan mean?
AnswerReplacing an existing loan with a new one
A refinance pays off the old loan with a new loan on different terms.
Money · Facts & stats
Refinance facts & stats
8 fact-checked facts about refinancing basics and loan vocabulary, each with the reason behind it. 4 more are in today's round and join this page after it closes.
The basics
What does APR stand for?
AnswerAnnual percentage rate
APR expresses the yearly cost of borrowing including certain fees.
Going deeper
What is a cash-out refinance?
AnswerA new, larger loan where the borrower receives the difference in cash
Cash-out refinancing borrows against home equity.
What are closing costs?
AnswerFees paid to finalize a new loan
Closing costs include items like appraisal and origination fees.
What does LTV stand for in lending?
AnswerLoan-to-value
LTV compares the loan amount to the property's value.
What does ARM stand for in mortgages?
AnswerAdjustable-rate mortgage
An ARM's rate can change after an initial fixed period.
Expert level
What does amortization mean?
AnswerPaying off a loan through scheduled payments of principal and interest
An amortization schedule shows how each payment splits over time.
What does a rate-and-term refinance change?
AnswerThe interest rate, the loan term or both, without taking cash out
Rate-and-term refinances adjust loan terms without extracting equity.
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