How Soon Can You Refi After You Buy a Home?
Maybe you just bought a new house, or recently refinanced your existing home and you are wondering how soon is too soon to refinance.
For most loan programs, you will need to wait at least six months before you refinance into a new loan, but there are some loan programs that will allow you to refinance into a new home loan with absolutely no waiting period.
In this video we are going to share what you need to know about refinancing your home loan.
If you have a conventional mortgage, you can typically refinance into a lower interest rate as soon as you want. However, you’ll have to wait six months if you want cash-back.
Keep in mind many lenders have a six-month “seasoning period” before a current borrower can refinance with the same company. So, you’ll likely have to wait if you want to refinance with the lender you’re already using.
While it’s rare, some lenders charge a prepayment penalty fee that could derail your refinance plans. Check to see if your current loan has a prepayment penalty clause before moving forward.
If you’re hoping to take cash out, you’ll typically have to wait six months before refinancing regardless of the type of home loan you have.
In addition, a cash-out refinance usually requires you to leave at least 20 percent equity in the home.
So, before you can use a cash-out refi, you need to be sure you’ve built up enough home equity to make one worthwhile. If you made a large down payment, you may already have enough home equity to qualify.
GOVERNMENT LOAN REFINANCE RULES
The rules are a little different if you have a government-backed mortgage. This includes FHA, USDA, and VA loans.
With a government loan, you have the benefit of being able to use a Streamline refinance.
Streamline refinancing — such as the FHA Streamline Refinance or VA IRRRL program — cuts down the time and paperwork associated with a refi so you can get a lower rate faster.
However, you have to wait six to seven months before using a Streamline refinance to replace your original mortgage. And you must have a recent history of on-time mortgage payments.
WHEN IS A REFINANCE WORTH IT?
Dropping your rate with no associated costs makes the decision to refinance an easy one.
Another reason to refinance is that you can lower your monthly payment.
Refinancing sooner versus later can also be a good strategy if you:
Want to take extra cash out to pay for something big like home improvements.
Want to use equity for debt consolidation, paying off high-interest credit cards or personal loans.
Want to switch from an adjustable-rate mortgage to a safer fixed-rate mortgage.
Need to take a partner off your loan due to a recent separation.
Have an FHA loan, which requires mortgage insurance premiums, and you want to eliminate those extra payments. A conventional won’t require private mortgage insurance (PMI) if you have at least 20 percent equity in your home.
Have seen a boost in your credit score recently; you may qualify for an even lower refinance rate with a higher credit score.
Yes, you could save money by getting lower monthly payments with a refinance, but a mortgage refinance loan can also help you with bigger-picture financial goals. It’s important to work with a state-licensed mortgage professional who can help you create a real estate financial plan.
Kevin Brierton
Sr Loan Consultant NMLS 599873
NMLS: 599873
Caliber Home Loans
(480) 553-8770
16430 N Scottsdale Rd Ste 170,
Scottsdale, Arizona 85260
Corporate NMLS: 15622
All loans are subject to credit approval. All rates and programs subject to change without notice. Other restrictions may apply. This advertisement is not a loan disclosure or commitment to provide a loan approval or a specific interest rate. This information is not intended to be an indication of loan qualification, loan approval or a commitment to lend. Other limitations may apply. Caliber Home Loans CHL NMLS #15622 EQUAL HOUSING LENDER
