Taking out a new mortgage loan to replace your current one is known as refinancing. Similar to when you applied for a new mortgage when you bought your home, you do so when you refinance. But this time, your old mortgage balance is paid off with the borrowed funds rather than buying a new one. The debt on your present mortgage is basically replaced through refinancing. You can also choose the rate and length of your new mortgage, allowing you to obtain a new mortgage that saves you money or aids in the achievement of other financial objectives.