To replace an existing loan with a new loan, typically to obtain better terms such as lower interest rates. The process involves paying off the original debt with proceeds from the new loan.
Compound of 're-' (again) and 'finance' (14th century), from Old French 'finer' meaning 'to end' or 'settle.' The specific financial term emerged in the early 20th century as banking practices became more sophisticated and competitive lending developed.
Refinancing became a household term during the mortgage boom of the 1990s and 2000s, when fluctuating interest rates made it profitable for homeowners to repeatedly restructure their loans. The practice essentially treats debt as a renewable resource rather than a fixed obligation.
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