The existing mortgage is paid off and replaced
The new refinance loan pays the existing first mortgage and establishes a new balance, term, payment structure and set of loan documents. It is not a modification of the old note.
The transaction may also address permitted closing costs, subordinate financing or limited incidental cash under the selected program’s rules.
A different payment does not tell the whole story
A longer term can reduce a monthly obligation while increasing the time over which interest is paid. A shorter term can increase the required payment while changing the payoff schedule.
Compare total costs, the remaining term on the current loan, the new term and how long the homeowner expects to keep the mortgage.
Qualification and property review still matter
The lender may review income, employment, credit, assets, debts, occupancy, property value, insurance and title. Documentation or appraisal options vary by program and transaction.
A prior approval does not carry forward automatically because the borrower, property and guidelines may have changed.
Use side-by-side written estimates
Compare the current mortgage with one or more Loan Estimates. Identify closing costs, points or lender credits, mortgage insurance, escrow treatment and whether costs are paid upfront or added to the balance.
This is general mortgage education. The result depends on current terms and a borrower-specific review.