What is the term for obtaining a new mortgage loan on a property already owned and paying off the existing loan?

The correct term for obtaining a new mortgage loan on a property already owned and using it to pay off the existing loan is "refinance." This process involves replacing the current mortgage with a new one, typically to secure a lower interest rate, reduce monthly payments, or change the loan term. Refinancing can also allow homeowners to access equity in the property, but the primary function in this context is paying off the existing mortgage with new financing.

Other options have distinct meanings that do not fit this scenario. A home equity loan involves borrowing against the equity of the property without replacing the existing mortgage. This is typically a separate loan rather than a refinancing of the current mortgage. A second mortgage is an additional loan taken on a property that already has a first mortgage in place and is usually subordinate to the first mortgage. A loan modification refers to changing the terms of the existing mortgage loan, such as adjusting the interest rate or repayment period, rather than replacing it with a new loan.