Refinancing is when you apply for a new mortgage secured by using your house as collateral for the purpose of paying off the mortgage that is presently on the house (or other real property). For example, you might have a morgage that has an Interest Rate that is above the current Interest Rates, then by refinancing you would be able to replace the old mortgage with the higher Interest Rate with the new morgage at a current interest rate.

Generally speaking, you should consider refinancing whenever you are able reduce your payments in a way that meaningfully impacts your life. This is usually the case when current rates are lower than when you initially got your loan or if your credit has dramatically improved. As well, it could be highly beneficial if you are able to take 'cash out' to pay off high-interest debts (credit cards, for example), student loans, for home & life improvements; or perhaps you would like to greatly reduce the amount of interest you will pay over the term of your morgage.

You may also consider refinancing if you are in a Variable Rate Morgage Loan with terms that adjust in the future; such adjustments may adversely affect you if not rectified by refinancing.