Refinancing Meaning: Definition, Examples, and Translations
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refinancing
[rɪˈfaɪnənˌsɪŋ ]
Definition
financial process
Refinancing is the process of revising a payment schedule for repaying debt. This often involves obtaining a new loan to pay off the original loan, typically to secure better interest rates or terms. Homeowners often refinance their mortgages to take advantage of lower rates or to access home equity.
Synonyms
reloaning, remortgaging, restructuring.
Examples of usage
- Many homeowners are considering refinancing their mortgages.
- Refinancing can save you money on interest payments.
- After reviewing her finances, she decided that refinancing was the best option.
- He opted for refinancing to manage his student loan debt more effectively.
Translations
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Interesting Facts
History
- Refinancing became popular in the early 20th century as more people began taking out mortgages to buy homes.
- During the Great Depression, many homeowners refinanced to avoid foreclosure, leading to changes in lending practices.
Economics
- Interest rates play a significant role; lower rates can make refinancing attractive, saving money over the life of a loan.
- Governments can influence refinancing availability through policies that affect consumer credit and economic stability.
Pop Culture
- Movies and TV shows often depict characters refinancing homes as a way to solve financial problems or achieve dreams.
- The concept of refinancing is frequently discussed in personal finance programs and blogs, emphasizing financial literacy.
Psychology
- People often feel anxious about refinancing due to the complexities of loans and financial decisions.
- Understanding the benefits can alleviate this anxiety, as refinancing can lead to reduced debt load and increased financial freedom.
Origin of 'refinancing'
Main points about word origin
- The word comes from 'refine', meaning to improve, and 'finance', meaning to deal with money.
- Originally associated with improving methods of funding, the term has evolved to mean adjusting existing loans.
The term 'refinancing' combines the prefix 're-' meaning 'again' or 'anew' with the word 'finance'. The root 'finance' comes from the Middle English 'fianse', derived from the Old French 'financer', which in turn comes from 'finance', meaning 'payment' or 'settlement'. The concept of refinancing has been prevalent since at least the mid-20th century, particularly as the real estate market expanded and interest rates fluctuated. It became increasingly common for homeowners to refinance their mortgages in response to changing economic conditions, seeking to lower their monthly payments or access cash tied up in their home equity. Over time, refinancing has also spread to other types of loans, including student loans and credit lines.