What does refinance mean?

The origin traces back to the Court Finance in France. What has changed since then?

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Marina Orlova of Hot for Words: 2.5% ... 3.1% ... 4.11% ... With interest rates so low, everyone keeps talking about refinancing. All the radio and TV commercials say it's as easy as filling out some paperwork ... but I want to understand what it really means to refinance.

Let's start by looking at the second half of the word: "finance." "Finance" comes from the Latin root word "fin," which means "end." Fin evolved into "finer," which means "to end or settle a debt," and later passed through Old French as "finaunce" before morphing into "finance" in Middle English.

So, for example, when you finance a car, you end your debt to the car dealership (although you begin a new debt to a bank!). The word "refinance" is the combination of "re" (which means "again") with the word "finance." So "refinance" means to replace one loan with another - to finance again.

But as you know, my dear students, words have both literal meanings as well as connotations. As the word "finance" evolved over time, so did its connotations. In France during the 1700s, the word was associated with the Court Finance, which many people didn't like. The Court Finance lent money to the state to pay for wars and other royal initiatives, but many people thought this didn't really benefit society.

But in England, the opposite happened - the word finance became associated with a very prestigious activity. The English Court Finance was very politically savvy, and they came to control some activities of the monarchy.

Over time, the Court Financiers expanded into trade and other commercial ventures, and the word "finance" became even more positive. By 1800, the word started being used the same way we use it today.

Today, due to the mortgage crisis, the poor word "finance" may have had its reputation tarnished again. However, banks that are willing to refinance high-interest-rate loans may be putting a positive spin on things again. Tell me students, what do you think when you hear the word finance?



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