If you recently got a mortgage but aren’t satisfied with the interest rate or terms, you’re probably wondering if you can refinance it right away. The short answer is: It depends. In some cases, you may be able to refinance immediately. But depending on the and your lender’s requirements, it could also take six months or longer.
could potentially save you a good chunk of change over the life of the loan. However, not every mortgage lender or type of loan allows you to refinance immediately; some may enforce a waiting period. So, how soon can you refinance a home mortgage? Here’s what you can expect:
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Conforming loan refinance (no cash out): Lender-dependent, but anywhere from immediately to one year from the original loan date
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Jumbo loan refinance (no cash out): Varies by lender
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Cash-out refinance (conforming, jumbo, FHA): 12-month waiting period
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Cash-out refinance (VA): 210-day waiting period
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FHA or VA Streamline Refinance: 210-day waiting period
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USDA loan refinance: From 6 months to 12 months, depending on refinance type
Some mortgage lenders will have their own requirements for how soon you can refinance your mortgage after buying the home, but these are the rules of thumb.
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There’s no limit on after your most recent refinance, as long as it makes financial sense for you. However, depending on the lender and the type of mortgage loan, the waiting periods mentioned above can still dictate how soon you can refinance again.
For example, you can typically refinance a whenever you want after your most recent refinance, provided that you meet the lender’s requirements. However, you may have to wait up to 12 months if you want a cash-out refinance rather than a traditional refinance.
Also, you can refinance an FHA or VA loan after 210 days, but depending on the circumstances, you may have to wait 12 months to refinance a USDA loan again.
Depending on your financial goals and the type of mortgage loan, you can refinance your loan in various ways. But before you start the process, make sure you understand the rules associated with each.
When you take out a on a conforming loan — a conventional mortgage with terms and conditions that meet Fannie Mae’s and Freddie Mac’s funding criteria — you pay off your existing conforming loan and replace it with a new one.
As mentioned above, there is no legal minimum timeframe between closing on your last conforming mortgage and refinancing into a new loan. However, some lenders impose a six-month or even one-year waiting period before you can refinance after taking out a mortgage with them. In this case, you could get around this rule by .
are another type of conventional loan, but they’re non-conforming loans, which means they exceed Fannie Mae and Freddie Mac’s conforming loan borrowing limits and are not backed by any government agencies.
Though jumbo loan lenders may not require a waiting period, they might be pickier about who they approve for refinancing since these loans are much riskier than conforming ones.
With a , you tap into your home equity by taking out a new mortgage for more than you owe on the first one and receive the difference in cash. You typically need to wait at least six to 12 months (depending on the mortgage type and lender) and have built 20% equity in your home before you can do a cash-out refinance.
To qualify for both the FHA Simple Refinance and the , you must already have made at least six payments on your existing FHA loan. Your loan must be in good standing, and at least 210 days must have passed since the closing date.
The difference between these two programs is that the FHA Streamline Refinance program requires that borrowers receive a “net tangible benefit” from refinancing. That “benefit” usually translates to either a lower interest rate or monthly payment. There’s no “net tangible benefit” requirement for an FHA Simple Refinance.
The , also known as a VA streamline refinance, allows you to refinance your existing VA loan as long as it helps you financially, like locking in a lower interest rate. To qualify, you’ll have to wait until 210 days after making your first payment on your existing mortgage.
If you want to qualify for the , your mortgage must be current with on-time payments for the past 12 months, which means you can’t refinance a USDA loan unless a year has passed since closing. Also, your new monthly mortgage payment must be at least $50 lower after the refinance for you to be approved.
If you’re looking at a non-streamlined USDA refinance (the phrase used for a USDA rate-and-term refi), you’ll need to show a minimum of six months of on-time payments and wait 180 days from your original USDA loan closing date.
Refinancing your mortgage may not always be the smartest move, especially if the costs outweigh the benefits. But here are a few scenarios :
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Your home value has gone up. If you need cash to pay for big-ticket items and your home value has increased since you first took out your original loan, a cash-out refinance can make financial sense if you get a better interest rate on the new loan.
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You want to convert to a fixed-rate mortgage. Refinancing into a could offer some peace of mind if you have an adjustable-rate mortgage but are worried about future interest hikes.
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Your credit score has improved. Typically, the better your credit score, the better mortgage rates you can qualify for. Use the to see how much you could save by refinancing your mortgage with a higher FICO score.
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Mortgage rates have gone down. If current rates are lower than when you bought your home, a mortgage refinance could save you money on interest and lower your monthly payments. No matter the latest rates, though, always check that the math works out in your favor using a .
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You want a shorter loan term. Refinancing to a shorter loan term can be a solid idea if you want to pay off your mortgage faster. But remember, shorter loan terms mean higher monthly payments, so make sure you can afford them.
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You can get rid of private mortgage insurance. You may be paying for PMI if you put less than 20% down on your original mortgage. Refinancing is just one way to and lower your monthly payments.
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While some lenders let you do a rate-and-term refinance immediately, it’s more common for lenders to refinance a mortgage after you’ve had the loan for six to 12 months. If you’re looking to do a cash-out refinance, you’ll need to wait six to 12 months and have at least 20% equity in your home.
For a VA IRRRL (aka Streamline Refinance) or , you’ll need to wait at least 210 days since you closed on your original loan.
To do a cash-out refinance, you’ll typically need at least 20% equity in your home. However, if you’re just doing a rate-and-term refinance and aren’t looking to take money out, you generally won’t need to meet strict equity requirements.
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