Refinancing is the process of replacing an existing loan with a new one, often to secure better terms. This can involve lowering the interest rate, reducing monthly payments, or changing the loan duration. Homeowners frequently refinance their mortgages to take advantage of lower interest rates or to access equity in their homes. When refinancing, borrowers may also consolidate debt or switch from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage for more stability. It's important to consider the costs associated with refinancing, such as closing costs and fees, to determine if it is financially beneficial in the long run.