If i refinance my house what happens?

Dorsey
when one refinances, does that mean they get a little money back to apply towards the principle?

Alfredia
There is more than 1 type of re-financing.Most of the time you borrow your exact mortgage balance, but you do it on better terms. This will usually either lower your monthly payment or greatly reduce the term of the loan. In either case, your new loan replaces your old loan. Some people do a 'cash-out' refinance. If they owe $100, 000 and the house is worth $300, 000, they might get a new mortgage on their house for $150, 000 and take the extra $50, 000 to do something else with. This is often dangerous as whatever you took the money to do is often something temporary (vacation, car, education) and you have put your house at more risk to do it. To directly answer your second question, no, they don't 'get a little money back to apply to the principal'. good luck!

Lucretia
No. Refinancing usually means that you get a lower interest rate, and thus lower monthly payments. But it costs money to refinance. Closing costs are usually added to the principle. Whether you save money in the long run depends on how long you intend to pay the new mortgage and how much lower your interest rate will be.