What is the primary purpose of refinancing?

The primary purpose of refinancing is to obtain a new mortgage with a lower interest rate. By refinancing, homeowners can take advantage of lower interest rates that may be available since they initially took out their mortgage. This can significantly reduce monthly payments and the total interest paid over the life of the loan. Additionally, refinancing can lower the overall cost of the mortgage, making it more affordable for the borrower.

While the other options present valid financial strategies, they do not capture the essence of refinancing as effectively. Selling a home at a higher price pertains to real estate transactions rather than refinancing. Extending the loan term may be part of a refinancing process, but it is not the central purpose; the main intent is to secure a better interest rate. Consolidating multiple loans into one is also a separate financial strategy, typically associated with managing debt rather than specifically related to refinancing a mortgage.