When you refinance a debt, you replace one debt with another debt. The goal of refinancing a debt is usually to secure a better interest rate and payment terms—such as lower monthly payments. You might also seek to consolidate some debts through refinancing by borrowing enough money from an existing lender to pay off some debts to other lenders (such as credit cards) and make one smaller monthly payment, rather than multiple monthly payments.

In Massachusetts, refinancing a debt involves taking out a new loan to pay off an existing one. This process is commonly used by borrowers to secure lower interest rates, reduce monthly payments, or consolidate multiple debts into a single payment. The terms and availability of refinancing options are influenced by the borrower's creditworthiness, current market interest rates, and the policies of financial institutions. State laws, including the Massachusetts Consumer Credit Cost Disclosure Act (M.G.L. c. 140D), provide protections to consumers by requiring clear disclosure of the terms and costs associated with refinancing. Additionally, federal laws such as the Truth in Lending Act (TILA) ensure that lenders provide borrowers with detailed information about the costs and terms of the new loan. Borrowers considering refinancing should carefully evaluate the terms of the new loan, including any fees or penalties for early repayment, and consider consulting with an attorney to understand the legal implications of the refinancing agreement.