Refinancing a home involves replacing your current mortgage with a new one, typically with different terms. The new loan pays off the original mortgage, and you start making payments on the new loan. People usually refinance to take advantage of lower interest rates, adjust their loan term, or access their home's equity. There are two common types of refinancing: Rate-and-Term Refinance: This type aims to reduce the interest rate, shorten or lengthen the loan term, or change the type of mortgage (e.g., switching from an adjustable-rate mortgage to a fixed-rate one). It helps lower monthly payments or reduce the total interest paid over the life of the loan. Cash-Out Refinance: This type allows you to borrow more than what you currently owe on your home by tapping into its equity. The new loan amount is higher, and the difference is given to you as cash, which you can use for purposes like home improvements, debt consolidation, or other major expenses.