system
Given the following post, respond as if you're commenting on Reddit:
human
ELI5: What does it mean to refinance a house?

I know someone who is refinancing their house. He was telling me about it, but I really couldn't follow. So what happens?
gpt
Most people take out a loan to buy a house and they use the house as collateral for the loan. This means that if you don't pay the loan, the bank can take the house and sell it to get its money back. These loans are called mortgages. They have certain terms, such as the interest rates and over how many years the loan has to be paid off.

When you refinance you find a lender who loans you the money to pay off the original mortgage. You once again use your house as collateral for the new loan and now have a mortgage with a different lender.

People refinance to get better terms on their mortgage. If your original mortgage has an interest rate of 6% but you can get a new one with a 4% interest rate you can save money by refinancing. Reasons you may be able to get a lower interest rate include better credit on your part (maybe your credit score rose since you took out the original loan) or a better lending environment (federal interest rates are low so banks are generally giving lower interest loans).