Am I the only one who doesn’t understand how mortgage refinancing works? I’m having trouble understanding how a loan instrument can be used to purchase more properties or even negotiate better rates.

Question

How are these advantages possible AFTER a mortgage has been signed? Help needed as I’m trying to wrap my head around financial mechanisms – why is this a thing and under what circumstances/ conditions does a refinancing make the most sense to use?

In: 293

Answer 1

You have an existing mortgage
You ask a lender to refinance your mortgage at a better rate.
Lender pays off your mortgage and now you have a new mortgage with the new lender. It could also be your existing lender.