How Often Can You Refinance Your Home?

How Often You Can Refinance by Loan Type

In most cases, you can refinance your home as many times as you want and there is no such thing as refinancing too early or too often. But, there are waiting periods that will decide how soon you can refinance after previously refinancing or buying a home. You will also have to decide whether it makes financial sense to refinance more than once.

The rules about how often you can refinance your mortgage depend on the loan type you have. They also differ depending on rate-and-term refinances vs cash-out refinances.

• Conventional Loan: No waiting period to refinance. You may be able to refinance immediately after closing on your loan.
• Government-backed loan: Six-month waiting period to refinance. FA and VA Loan programs may require you to wait at least six-months after closing on your existing mortgage before you can refinance.
• Cash-out refinance: Six-month waiting period to refinance.

Some lenders do enforce a six-month waiting period regardless of the type of loan you have. Check in with your lender to see what their rules are for refinancing and the length of time you need to wait to refinance your home.

Types of Mortgage Refinance Loans

Homeowners have a few different refinance options available to them. Whether you currently have a fixed-rate or adjustable-rate mortgage, lenders offer two main types of mortgage refinance.

• Rate-and-term refinancing: this type will update the current loan term and offer borrowers a lower interest rate or a shorter term to pay the loan balance.
• Cash-out refinancing: this type also updates the loan terms, but gives homeowners cash based on their home equity.

Borrowers with FHA, VA, and USDA loans may also qualify for Streamline Refinancing which allows the homeowner to refinance to a lower rate and payment with no credit check, appraisal, or income review.

Cash-Out Refinancing

Homeowners typically use a cash-out refinance to leverage their home equity and get the capital they need for renovations or home improvements by using a new, low-interest mortgage. Some homeowners also use this type of refinance to consolidate debt or help pay for a child’s education.

This type of refinancing has slightly different rules and regulations compared to other types of refinancing. Most lenders require homeowners to wait at least six months after their closing date to do a cash-out refinance. If you have a VA loan, lenders will require you to have made a minimum of six consecutive payments before you can apply for a cash-out refinance.

However you plan to use the money, it is best to figure out how the new mortgage will affect your current financial situation. You will also need enough home equity to qualify for a cash-out refinance. On most conventional mortgages, your new cash-out refinance loan amount cannot exceed 80% of your home’s value. Lenders set these limits to ensure you have some equity left in your home after your refinance. But this rule is not necessarily the case for every conventional loan. Talk to your lender about the rules they use for their cash-out refinancing.

VA loans are an exception to the cash-out equity rules. They may allow cash-out loans up to 100% of the home’s value depending on the lender.

Reasons to Refinance Your Mortgage

Whether you are refinancing for the first time or fourth time, here is how to tell if refinancing is the best for your situation

• Lower your monthly mortgage payments: if you are looking to lower your monthly payments, refinancing your loan into a longer term extends the length of time you have to repay your loan, reducing your monthly mortgage payments. This type of refinance may require you to end up paying more interest over the life of the loan.
• Lower your interest rate: If you originally took a loan out when interest rates are high, refinancing to a more favorable loan term could help you save money.
• Cash-out your home equity: If your home value has increased, a cash-out refinance gives you access to the equity you have in your home. Many borrowers use this cash to pay off debt or make home improvements.
• Shorter loan term: Refinancing to a shorter loan repayment period is another common reason to refinance. You may be able to get a lower interest rate as well with this option.