How Often Can You Refinance Your Home?  

Many homeowners like to refinance their homes and pull out equity for things they want to purchase. They also may refinance their homes to get a lower interest rate. However, a common question is ‘how often can you refinance your home’? This is a key question to answer before you start loan shopping. Many people buy a home and then want a cash out refinance to pay for furniture, landscaping and home improvements. It’s also common for borrowers to seek home refinancing to achieve a lower monthly mortgage payments when interest rates drop. Borrowers want to know when and often they can refinance their home, so this article will explore the rules and guidelines.

How Soon Can You Refinance Your Home Mortgage?

Technically, there are no restrictions on the frequency of refinancing your home.

This allows you to refinance your mortgage whenever it aligns with your financial objectives, unless the lender has specific seasoning requirements.

So, it depends on your lender and loan type, you may face a waiting period, often referred to as a seasoning requirement.

Learn more below about refinancing a home loan at no cost.

If you have loan questions or want to file an application, the RefiGuide can help you today.

Seasoning Requirements for Home Refinancing

Mortgage lenders often have a time requirement for refinancing a home, which is a period you need to wait before refinancing your mortgage, typically at least six months.

Conventional Loans
This requirement usually applies if you are considering refinancing your home with your current lender. However, you might find a new financial institution willing to refinance sooner, bypassing the six-month rule. The exception is a cash-out refinance, where the waiting period is typically a firm six months.

Government-Insured Mortgages
Different requirements apply to government-insured mortgages:

FHA Streamline Refinance – Borrowers with an FHA loan looking to do an FHA streamline refinance must wait 210 days (seven months) from the closing date of the first mortgage and six months from the due date of their first mortgage payment before they can refinance.

FHA Refinance with Cash Out – Borrowers taking cash out during an FHA refinance have only the six-month waiting period from their first payment.

VA Streamline Refinance – Borrowers with a VA loan considering a VA streamline refinance must wait either 210 days from the date of their first mortgage payment or the date the sixth mortgage payment is made, whichever is later.

VA Refinance with Cash Out – Borrowers taking cash out during a VA home refinance must wait 210 days from the closing date of the first mortgage.

What Is a Home Refinance Loan?

When you refinance your home mortgage, you are simply replacing it with a new loan. The most common reasons to refinance a home is to obtain lower interest rate or pull out cash, or both.

There are other reasons you may want a loan refinance that we describe later in this article.

This is how the mortgage refinance process generally works:

• Your mortgage lender does a credit check on you.
• You submit your financial documents, such as bank statements, W-2s, pay stubs, and tax returns.
• You have and pay for a new home appraisal.
• The refinance loan goes through underwriting and is approved or rejected.
• If the loan is approved, the mortgage refinance loan is usually closed within 30 to 60 days.

Why Do People Refinance Their Homes?

Whether you want to refinance your home for the first or third time, there are many good reasons to do so. There also are reasons you shouldn’t:

• Get a lower rate: If you took out your mortgage several years ago, interest rates are probably different today. You also may have had a lower credit score, which led to a higher rate. If you can get an interest rate that is at least a point lower than your mortgage, refinancing your home can be smart. For instance, a 6% rate on a 30-year, $100,000 loan would cost $115,000 in interest over 30 years, while it would be only $44,000 at 4%. However, in 2024 rates for 30 year mortgages are over 6%, so most people aren’t refinancing for a lower rate.

• Reduce your payment: Perhaps interest rates aren’t lower than what you have now, but you can still reduce your payment by refinancing from a 15-year mortgage into a 30 year. However, if you refinance into a longer loan, you will pay thousands more in interest over time. If you refinanced a 5% 15-year mortgage into a 6% 30 year, the rate is higher, but the payment would be lower because of the longer term.

• Pay off the mortgage faster: Homeowners also may want to refinance their mortgage to pay down the loan faster. If you have a $100,000, 30-year mortgage at 6% and refinance it to 20 years, you’ll pay about $115 more per month. But you’ll save $43,000 in interest over the loan term.

• Get cash: If your house’s value has risen, you can refinance it to take out cash. This means refinancing to a new loan for the current mortgage, plus the amount of equity you want to take out. You usually need to have at least 20% equity to do a cash-out refinance. Some borrowers want to do a cash-out refinance to get money for paying off debt or making home renovations. Some people choose to take out a 2nd mortgage.  Read Refinance vs Home Equity Loan.

There also are reasons not to refinance your home:

• Interest rates dropped slightly: Having a lower rate can drop your payment, but it needs to drop enough to be worth paying refinancing closing costs. It your rate would drop from 6% to 5.75%, it wouldn’t be worth the closing costs to refinance.

• Your FICO score rose a few points: Refinancing after your credit score gets higher can be a good reason to do it. But if your credit score went from 700 to 720, it isn’t enough to make a refinance worth it. If you have past credit issue you may not want to refinance a home with bad credit because the interest rates will be higher.

• You want to buy something: Cashing out equity with a refinance to make certain purchases can be smart, such as renovating your kitchen. But you shouldn’t refinance and take out cash for a depreciating asset, such as a car. No should you use equity to pay for an expensive vacation. It isn’t worth the extra long-term costs to take out money on something that won’t pay you back.

You should carefully analyze why you want to refinance your mortgage. If the reasons fall into the latter list above, you should reconsider. Another option to refinancing your mortgage is to get a home equity loan or home equity line of credit (HELOC). But again, ensure that you have a good reason for taking out equity from your home. The more equity you take out, the higher the loan payment.

How Often Can You Refinance a Mortgage?

Refinancing a mortgage means taking out a new mortgage and using the money to pay off the current loan. You can do a mortgage refinance with the same lender or another one. In a technical sense, there isn’t a limit to how many times you can refinance a mortgage. But there are usually limits to how often you can refinance a home loan.

Most lenders want you to live in the house for a year before they will use an appraised value to refinance the loan. This is called a seasoning requirement. Some lenders may want you to be in the home for six months before refinancing. But if you want to refinance to get rid of mortgage insurance, you may need to wait up to two years. However, this requirement depends on your lender, so you will need to ask them.

Cash-out refinancing usually requires you to wait six months at least from the last refinance before you can get approved again. This is usually the case even if you use a new lender.

Government-backed mortgages also have waiting periods. For instance, an FHA streamline mortgage requires you to wait six months or more from the first payment date. You also need to wait 210 days from when the FHA loan closed.

What Is the Home Mortgage Rate Outlook For 2024 And Beyond?

People who may want to refinance their mortgage usually want to know what interest rates are and where they are headed. In 2024, markets anticipated that the Federal Reserve would begin to lower rates. This hasn’t happened yet. As of May 2024,the benchmark federal funds rate holds steady between 5.25% and 5.5%.

Also, the typical rate for a 30-year fixed mortgage is approximately 7%. The Fed recently decided to keep interest rates where they are because inflation is still a problem in the US economy.

If you want to potentially refinance, here are some expert predictions on interest rates for the rest of 2024 and beyond:

• Freddie Mac: Mortgage rates will stay above 6.5% through Q3 of 2024.
• Fannie Mae: The average 30-year fixed rate will be 6.6% through 2024 and will be an average of 6.1% in 2025.
• Mortgage Bankers Association: The 30-year fixed rate average for the rest of 2024 will be 6.4%.
• Bank of America: The hope in 2024 for rate cuts have faded because the economy is still showing higher inflation and strength than anticipated. Bank of America thinks the first Fed rate cut will happen in December 2024, but rates will stay near 7% for most of the year.
• National Association of Realtors: There is still a high budget deficit, and many inflation metrics are too high. So, mortgage rates will stay between 6% and 7% for the balance of 2024.

How Much Does It Cost to Refinance Your Mortgage Loan? 

In most instances home refinancing will cost between 1.5 and 4% of the new loan amount. Check with banks and lenders so you can compare closing costs and interest rates.

The bottom line on interest rates for 2024 and beyond is that the Fed has yet to see inflation drop consistently to its 2% target. So, there isn’t urgency to cut rates in the near term. The good news is that the Federal Reserve has also said that it’s unlikely that the next interest rate move, whenever it is, will be a hike.

If you are considering a mortgage refinance to reduce your wait, you may need to stay in a holding pattern until rates drop in 2025. But there are other good reasons to refinance, as we have pointed out.

Summary on When You Can Refinance Your Home

Hopefully, you now understand how soon you can refinance a home loan. You generally need to wait six months or a year from the last refinance. Also, it is a common lender rule for first time home buyers to refinance after 12 months or use purchase price as the value.

If you are ready to do a home refinance loan, our loan experts at RefiGuide.com can lay out the best options for you. The RefiGuide will help you shop home refinancing offers today to get started on your loan application.

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