How Often Can You Refinance?

The short answer to the question of How Often Can You Refinance Your Mortgage is that there are no limits on the number of times you can refinance. However, there are some built-in factors that can save you from overdoing it—just in case you’re worried that you might become addicted to refinancing (because it seems that it’s possible to become addicted to almost anything these days).

First of all, if you are wondering whether or not it is time to refinance, take a look at the rates. It only makes sense to refinance if the rate is at least 2% lower than your current rate. That’s enough to actually make a difference in your payment and make it worth your while to go through the process.

Many lenders require that the mortgage you are refinancing has been held for at least 1 year. That requirement alone puts some time between the frequency of refinances. Lenders also may require that you have a minimum of equity in your home.  Of course, these  requirements are not just designed to keep you from getting too much of a good thing. They are put in place to protect the lenders from getting into a bad loan.

Then there is the paperwork. Some people might tell you that the process of refinancing is just like getting the initial mortgage.  Remember that? Not so much fun. Yes, refinancing does require you to sign a lot of papers and the process is similar, but not nearly as overwhelming.

Often closing costs will be associated with mortgage refinancing, but don’t let that scare you either. If you’ve followed the rule that your refi should be at least 2% lower than your current loan, closing costs should not be a problem. Look at the amount of the closing fee compared to your savings for one year. The fee should not be equal to or greater than the savings of refinancing, depending upon your savings goal.

Remember that the goal of refinancing is always to lower the amount of money you need to pay back to the lender. This may mean lower monthly payments or it could mean less overall interest paid. Refinancing is always a good move and should not cause you to become deeper in debt.

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2 Comments

  1. Guillermo
    Posted May 4, 2012 at 1:31 pm | Permalink | Reply

    Excellent article, I agree with you, a refinancing is always a good move and should not cause you to become deeper in debt, the idea is rearrange your payments per month.

  2. MultiGuy
    Posted May 18, 2012 at 10:00 am | Permalink | Reply

    Sorry but there is some inaccuracies here. A lender may require you to be on a loan with them for a certain period of time before you can refinance with THEM, but that does not prohibit you from refinancing with other lenders. Secondly, waiting until 2% lower is silliness. I’d refinance for .125% lower. For example I bought a house in April 2011. I refinanced .25% lower in July 2011. I refinanced again 2.25% lower in November and refinanced yet again in March 2012 .125% lower. I’m about to lock again.

    With no closing cost loans, and only doing it for the balance I am lowering my payments by roughly $25 per .125% per month. That’s roughly $9000 per 30 years. Why not have $300 extra in your pocket a year?

    Is there paperwork, yes? But for $9K per .125% savings over 30 years, it’s worth it to me. And they even come to my house to close.

    Remember, the reason it’s said you have to wait is because if you refinance too soon afterwards the lender loses their sizable commission. Nothing else. In fact when a different lender offered a better rate 30 days after refinancing, my current lender offered a 60 day lock at the same rate. To be nice I stayed with my same lender so he wouldn’t lose his commission from my previous one.

    Of course the key is to not keep refinancing for the same amount but for the balance. Otherwise you’re just delaying the final payoff and paying more in interest.

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