To refinance an existing loan is to pay it off with fund obtained from a new loan. The new loan is usually for the same amount as the existing loan and uses the same property as secured collateral. As refinancing incurs expenses, potential refinancers must weigh the expenses against the potential costs savings of a presumably lower interest rate.
Remember, however, if you are considering refinancing you should first check to see if your existing loan carries a prepayment penalty. Although refinancing is typically used in reference to a mortgage loan, any loan could potentially be refinanced.