What is refinancing and why would someone choose to refinance?

Refinancing is the process of taking out a new loan to pay off an existing loan. People may choose to refinance to get a better interest rate, reduce their monthly payment, change the loan term, or switch from a variable rate to a fixed rate. Refinancing can also allow borrowers to consolidate multiple loans into one. Ultimately, the goal of refinancing is to save money on interest and/or make monthly payments more manageable.