Refinancing a loan involves replacing an existing loan with a new one, typically to benefit from better terms. The benefits include:
- Lower Interest Rates: Reducing the interest rate can save money over the life of the loan.
- Reduced Monthly Payments: Lower interest rates or extended loan terms can decrease monthly payments, improving cash flow.
- Shortened Loan Term: Refinancing to a shorter term can help pay off the loan faster, saving on interest.
- Switching Loan Types: Refinancing can change a variable-rate loan to a fixed-rate loan, providing stability in payments.
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