What term describes the process of paying off one loan with the proceeds from a new loan using the same property as collateral?

The term that describes the process of paying off one loan with the proceeds from a new loan using the same property as collateral is known as a refinance transaction. In this scenario, a homeowner takes out a new loan to pay off an existing mortgage, which often leads to lower interest rates or better loan terms. The property remains as collateral for the new loan, and this process can free up cash or reduce monthly payments, making it a common financial strategy for homeowners.

Refinancing can also involve changing the loan term or extracting equity from the property, which can provide additional funds for renovations, debt consolidation, or other expenses. Understanding refinancing is crucial for real estate professionals and buyers alike, as it can significantly impact financial strategy and property investment decisions.

In contrast, other options such as consolidation transactions refer to combining multiple debts into a single loan, which is not specifically related to the use of collateral or property equity. An equity loan, while related to accessing home equity, does not entail replacing an existing loan but rather borrowing against the property's value. Similarly, a home equity line of credit (HELOC) is a revolving credit option based on home equity but does not directly involve paying off an existing loan through a new loan.