What is the primary purpose of refinancing in real estate?

The primary purpose of refinancing in real estate is to replace an existing loan with a new loan. This process often aims to achieve more favorable loan terms, such as a lower interest rate, reduced monthly payments, or altered loan duration, which can lead to significant financial savings over time. Refinancing can also provide access to built-up equity in the property, allowing homeowners to fund renovations or consolidate debt.

The other options do not align with the essence of refinancing. Selling a property at a higher price pertains to the real estate sale process rather than loan management. Eliminating property taxes is not a function of refinancing; property taxes are determined by local governments and are unrelated to the financing of a home. Lastly, transferring ownership refers to selling or gifting the property, which is a separate transaction from refinancing that focuses on the loan structure rather than ownership transfer.