How often can you refinance your home? There are many reasons why you might need to look for home refinancing again after closing on an initial refinancing agreement. Perhaps an opportunity for a better mortgage has presented itself. Or maybe unexpected life events have brought unforeseen changes to your finances.
So, how often can you refinance your home? As long as you own a home, you can refinance as often as you like. However, it is unlikely that you will find a lender willing to approve refinancing within a year of closing on another refinance agreement. It is also important to understand that each time you refinance you are resetting your mortgage. That may make refinancing more expensive than savings. Mortgage experts recommend that refinancing again after closing should only be done if it yields a full percent decrease in your current rates.
How Often Can You Refinance Your Home?
Here is a question you may have never considered: How often can you refinance your home? You might think that is the sort of question asked by someone looking to profit off the real estate market. But the reality is that even though we all know that it is critical to be very careful and analytical before making a major financial decision, the unexpected can occur. There is the possibility that you may find yourself in a situation where you need to refinance your home loan again soon after you close. Having to refinance shortly after you close is not an everyday occurrence but it is not an improbable event. While you cannot expect the unexpected, the best that can be done is to consider all the possibilities. The purpose of this article is to provide you with the information necessary to consider this particular possibility.
Let’s get to the heart of the matter at the start. How often can you refinance your home? The answer is: As often as you like, but there are caveats. Before we explore those caveats further, let’s look at the reasons why you might need to seek refinancing again. Some reasons to seek another refinancing are actually rather similar to the reasons why you may have sought refinancing originally. Perhaps your financial circumstances have changed (e.g. your income increased, or your credit rating dramatically improved), and you now have an opportunity to switch your ARM to a fixed-rate loan. Along similar lines, perhaps you can now shorten the payment period on your loan. Or it could turn out that you need to cash out your equity to consolidate a sudden debt or an emergency home repair.
As was previously stated, those are the reasons you might be familiar with for needing to refinance. But having to refinance again—especially within a short period—is somewhat of a special case scenario. This is why there are other reasons for doing so that you probably have never considered. For example, perhaps you took out a 30-year fixed mortgage on your home. But, for one reason or another, you find out that you are only going to be in that particular home for the next five years (e.g. as a result of a sudden career relocation). Thinking along similar lines, after shortly signing your old financing a dramatic life event might occur that leaves you with reduced income. Meaning that you will no longer be able to make the previously agreed-upon payments for your loan. Or maybe your loan includes a co-borrower, and for one reason or another (e.g. divorce), you need to buy that person out.
There is also the possibility that interest rates dropped so drastically that a new loan would be more financially beneficial than your old one. In this case, being up to date with the latest mortgage rates may be key to making sure you refinance at the right time.
A Closer Look into Refinancing Frequency
Whatever the case may be, be aware that there are several valid reasons for seeking refinancing soon after closing on your original refinancing loan. Some of these reasons perhaps seem like distant possibilities. But in the event that they occur, knowing potential solutions gives you a strategic advantage. Now having looked at why let’s turn once more to the question of how often can you refinance your home. The answer as stated above was as often as you like, but let’s take a closer look at what that means.
Now the very first caveat to the question of how often can you refinance your home is both fundamental and perhaps the most obvious. While you can refinance your home as often as you like, you actually need to own a home to do so. Refinancing is like any other form of loan: it requires equity. And in-home refinancing, your home is your equity. That’s why experts in the mortgage industry recommend that you shouldn’t consider refinancing if you’ve only lived in your home for one or two years. There hasn’t been enough time for you to build up enough equity in your home. Though be aware that even if you’ve been in your home many years, there are very few lenders that are likely to approve refinancing within a year of closing on your original refinancing. And this brings us to our closing point. That point is found in the second question you should be asking yourself.
The first question asked was: How often can you refinance your home? We already know that the answer is as many times as you like provided you own your home, but if you are considering another refinancing, the second question you should ask yourself is: Should I refinance again? The answer to that question is: Maybe. Restarting your mortgage with new rounds of refinancing can be very expensive. That’s why mortgage experts suggest that you should only contemplate refinancing when you can decrease your current rates by a full percent.
