How many years before refinancing

Many homeowners can refinance into a lower-rate loan with no waiting period. And others need to wait as little as six months.

If you have a conventional mortgage, you can typically refinance into a lower interest rate as soon as you want. If you have a conventional mortgage — one backed by Fannie Mae or Freddie Mac — you might be able to refinance immediately after closing your home purchase or a previous refi. You can get around that six-month rule by simply shopping around and refinancing with a different lender.

But you can get around that six-month rule by simply shopping around and refinancing with a different lender. Check to see if your current loan has a prepayment penalty clause before moving forward. In addition, a cash-out refinance usually requires you to leave at least 20 percent equity in the home.

If you made a large down payment, you may already have enough home equity to qualify. The rules are a little different if you have a government-backed mortgage. With a government loan, you have the benefit of being able to use a Streamline refinance. 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.

A mortgage is a contract. Closing attorney Chuck Biskobing says there are no major risks to refinancing within a year or so of purchasing. To find out if a refi is worth it based on your remaining term, try this refinance calculator. What are the costs? Dropping your rate with no associated costs makes the decision to refinance an easy one.

There was a lot of red tape involved, and the closing costs were expensive. So why would you want to repeat all those steps again? First, you may be able to save a lot of money. In and , mortgage rates reached their lowest levels in history — meaning thousands of dollars in savings for many. Current rates are still at historic lows. And the lower rates go, the bigger savings you could see. Another reason to refinance is that you can lower your monthly payment. That kind of green adds up fast.

And it can make a big difference as your financial situation changes. Maybe a baby is on the way. Perhaps you want to buy a new car. These are all important motives to reduce your mortgage payments with a lower interest rate. Yes, you could save money by getting lower monthly payments. Here's an explanation for how we make money. Founded in , Bankrate has a long track record of helping people make smart financial choices.

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The headlines about record-low mortgage rates might lead you to believe refinancing is the right move for you — and it could be. Consider these numbers: The average year fixed mortgage rate was 3. Department of Agriculture, and if it's not a jumbo loan.

A conventional mortgage meets qualification standards set by Fannie Mae and Freddie Mac. In most cases, you may refinance a conventional loan as soon as you want.

You might have to wait six months before you can refinance with the same lender. But that doesn't stop you from refinancing with a different lender. An exception is cash-out refinances. To get a cash-out refinance on a conventional mortgage you must have owned the home for at least six months, unless you inherited the property or were awarded it in a divorce, separation or dissolution of a domestic partnership.

The FHA has several types of refinances, each with its own rules. If you want to get an FHA refinance to borrow more than you owe and take the difference in cash, you're looking at an FHA cash-out refinance. If you don't want to take cash out, and you're willing to get and pay for an appraisal, you may choose an FHA rate and term refinance or FHA simple refinance.

You have to own and occupy the home as your principal residence for at least 12 months before applying for a cash-out refinance. You can do a cash-out refinance of a home you own free and clear. If you have a mortgage, you must have had it for at least six months.

Any mortgage payments due in the last 12 months must have been made on time. Rate and term and simple refinance. Any mortgage payments due in the last six months must have been paid on time, and you can have a maximum of one late payment 30 or more days late in the six months before that. FHA streamline. An FHA streamline refinance is a faster way to refinance from one FHA loan to another, with less paperwork, because it doesn't require an appraisal.

You must have had the mortgage at least days and have made at least six monthly payments.