How Often Can You Refinance Your Home?
Updated: Jan 31, 2020
Refinancing your mortgage is a decision many homeowners make, and for a myriad of reasons. A new loan may reduce monthly payments, shorten the term of the mortgage, or draw from the equity to provide cash out, just to name a few. However, with the current low interest rates and strong housing market, you may be asking how often you can refinance after reaping the rewards of doing it before.
Truthfully, there is no limit on how many times you can refinance your home, but there are some guidelines on when, and other common sense factors to be aware of.
How Soon Can You Refinance?
If refinancing makes sense for you, either after initial purchase or following a previous refi, there are no formal seasoning requirements. This means there is no standard time limit before refinancing again, however some lenders stipulate a 6-month waiting period.
Most federal programs like FHA, VA, Freddie Mac and Fannie Mae require a variation on the six months, such as requiring a borrower to make six mortgage payments before refinancing again. These seasoning periods are also more likely for cash-out refinances.
While it may seem cost prohibitive to refinance more than once in a short period of time, there are circumstances that could make it practical. When the interest rates drop again offering enough of a difference in payments, and you know you’ll be staying in the home long enough to recoup the costs, refinancing can be worth it.
Borrowers may also find themselves in the position, financially, to refinance again in order to reduce their term from 30 to 15 years. Monthly payments may go up but if an increase in income makes it feasible, the long-term savings on interest could be quite significant. Or perhaps you find yourself in need of cash for an unexpected major expense that can be resolved with a refinancing solution.
How Many Times Can You Refinance?
Again, there is technically no limit to how often you can refinance. Refinancing multiple times could make sense for some homeowners, especially if the equity is there. Because you’re potentially extending your mortgage and paying fees each time, it’s a good idea to crunch the numbers to make sure those costs are recouped in a reasonable amount of time. Ideally, the longer you plan to stay in the home the more sense it makes – even more so when reducing the term of the loan.
Being organized is a plus. Having the paperwork, appraisal information and tax records at hand from a previous refinance will streamline the process that much more the second or third time around.
The decision to refinance more than once is ultimately an individual one, depending on a homeowner’s circumstances, needs and objectives. If you’ve taken out a new mortgage on your home – years ago or more recently – and are wondering if another refi option is viable, we at EnTrust Funding (ETF) can help. Contact our team to learn about financial solutions in today’s market.