How often can you refinance your home?

Refinance your mortgage to take advantage of lower interest rates, change your loan terms or get rid of PMI. But once you’ve refinanced once, should you do it again? Though there’s no limit of how many times you can refinance, make sure it makes financial sense to do so.

How many times can you refinance a mortgage?

You can refinance your mortgage as many times and as often as you need. While there is no legal limit to the number of refinances you can make on a property, there are some conditions your mortgage must meet. Many lenders require a seasoning period, or time between refinances.

How soon can I refinance my mortgage?

A seasoning or waiting period is a mandatory period before you can reapply for a mortgage refinance. The length of time depends on the kind of loan you have.

A cash-out refinance has special rules. You’ll need to wait at least six months from closing before you can apply for a new cash-out mortgage refinance. Exceptions include if:

• You inherited the property.
• You were awarded the property from a divorce or separation order.
• The cash-out refinance qualifies for Fannie Mae’s delayed finance rule because you paid for the property in cash.

Should you refinance more than once?

Even though you technically can refinance your mortgage multiple times, it may not always be a good idea. Here are a few reasons to refinance again and a few points to consider before going through with it.

Reasons you might want to refinance again

Borrowers consider refinancing their mortgage for a variety of reasons, including:

• Better offer. You don’t have to use the same lender for your refinance. Shop around to find the most competitive terms.
• Lower rates. When interest rates drop, take advantage by refinancing.
• Changing loan terms. Save on interest over the life of your loan by changing the terms of your mortgage. Shortening your loan terms can increase your monthly mortgage payment, so make sure you can afford the change.
• Eliminating mortgage insurance. If you’ve built 20% equity in your home, you can refinance an FHA loan to a conventional loan to drop mortgage insurance.

Things to consider before refinancing again

Refinancing isn’t always the best idea. Think about the following before you decide:

• New closing costs. Refinancing is a new loan, so you’ll pay closing costs. These fees vary by lender, but likely run between 2% to 5% of the loan amount. So a $200,000 mortgage refinance might run you between $4,000 to $10,000 in closing costs.
• Breakeven point. If you plan on selling your home soon, you might not recoup your closing costs in your monthly savings.
• Early repayment fees. If you use a new lender for a refinance, find out if your old lender imposes a prepayment penalty for closing your loans early.
• Hard credit pull. As part of the approval process, your lender will need to perform a hard pull of your credit report. This will result in a temporary dip of your credit score.

Take the next steps

If you’re ready to refinance again, here’s how to get started.

1. Estimate your home’s value. Get an idea of what your property is worth by researching recent sales of similar homes in the area.
2. Compare lenders and rates. Shortlist lenders and loan programs that you may be eligible for before you start applying. It’s better to get a few loan estimates within the same 45-day period to avoid unnecessary dings to your credit score.
3. Apply for the loan. Review the loan offer and fees. Make sure that it makes financial sense to get a refinance.
4. Get an appraisal. Your lender will order a home appraisal. If the appraisal report comes back higher or lower than what the lender originally estimated, your loan terms may change.
5. Submit documentation. Collect and submit all necessary paperwork, such as bank statements and tax returns.
6. Close on the loan. Sign your loan documents and your new lender pays off your existing home loan.

Bottom line

You can technically refinance as often as you like. Most refinance programs require you to wait at least six months between transactions. You’ll also need to have enough equity and the right borrower criteria to qualify for a mortgage refinance.

But even though you can refinance, make sure it makes financial sense. Use a mortgage refinance calculator to see how much you stand to save.

Frequently asked questions

• Can you refinance your mortgage with another lender?

  Yes. Although your current lender may offer extra incentives to keep your business, you can shop around to find the best loan terms and interest rates.

• Can you refinance with bad credit?

  Yes. You can still refinance your mortgage even if you have poor credit. For example, borrowers with a credit score as low as 580 may qualify for an FHA rate-and-term refinance. And some loan programs don’t require a credit check at all.