Redoing your budget and wondering how does refinancing work? If interest rates have dropped since you last made and financed a major purchase, refinancing might be of interest to you. Typically, homes and even cars can be refinanced. Basically, a new loan with more current, lower interest rates and new terms can be applied for. If approved, you’ll save money in interest, and will also have lower monthly payments if the new loan is extended for the same amount of time. Regardless, you’ll save money, which is always a good thing!