How often can you refinance your home?

You may want to refinance your home for many reasons. Perhaps you’re looking to get a better interest rate on your mortgage loan, change your repayment term, or you want to borrow from your home’s equity to pay off debt or fund a home improvement project.

The good news is you can refinance as often as it makes financial sense, although some lenders may require a waiting period.

Let’s dive deeper into how often you can refinance your home, how long you may have to wait between home loans, and whether it makes sense to refinance your mortgage again.

• How often can you refinance your home?
• Refinance waiting periods: How often you can refinance by loan type
• Reasons to refinance more than once
• What to know before refinancing again
• Alternatives to refinancing your home again
• Should you refinance your home again?

How often can you refinance your home?

You can refinance your mortgage as many times as you’d like, but lenders do have mortgage refinancing requirements you must meet. For example, you must have sufficient equity in your home if you want a cash-out refinance — typically at least 20%.

While there’s no limit to how many times you can refinance your mortgage, there may be a limit to how frequently you can refinance your mortgage. Some lenders may apply what’s known as a "seasoning requirement," typically a waiting period of at least six months. But nothing is stopping you from seeking a better deal with a different lender at any time with most loan types.

Refinance waiting periods: How often you can refinance by loan type

Waiting periods vary depending on the lender and type of mortgage you want to refinance. Some waiting period guidelines for different loan types include:

• Conventional loan — No waiting period
• FHA streamline refinance — Six months from the first payment due date and 210 days from the closing date
• VA streamline refinance — 210 days from the first payment due date
• Cash-out refinance — Generally six months after purchase

While you may find financing through another lender, allowing your loan to season may benefit you if you’re building equity in your home before applying for a cash-out refinance.

WHEN IS THE RIGHT TIME TO REFINANCE A MORTGAGE?

Reasons to refinance more than once

You can refinance as often as you’d like, and you might consider doing so for several reasons, such as:

• Reduce your interest rate. If interest rates have dropped since you last refinanced, you may be able to save money by refinancing at a lower interest rate. For example, a 30-year mortgage of $250,000 with a 5% interest rate would cost you $233,139 in interest over the life of the loan. If you’re able to refinance to a 4% rate, your total interest drops to $179,674 — a savings of $53,465 over 30 years. You can use a mortgage payment calculator to find out how much you could save with a lower interest rate.
• Lower your payments. Reducing your interest rate may lower your monthly payments. But if you don’t qualify for a lower rate, you can still refinance into a longer repayment term, which will reduce your monthly loan payment. Just remember, each time you refinance your loan to a longer term, you increase the amount you’ll pay in interest.
• Get rid of mortgage insurance. If your down payment was less than 20% on a conventional mortgage, you might be paying private mortgage insurance (PMI) on top of your payment each month. But if the market value of your property has significantly increased, refinancing your mortgage may help you get rid of PMI.
• Eliminate your mortgage insurance premium. Similarly, if you have an FHA loan with mortgage insurance premium (MIP) payments attached, you may want to refinance to a conventional loan once you reach the 20% equity threshold. When you meet that benchmark, you could refinance to a conventional loan and ditch the mortgage insurance.
• Pay off your loan sooner. Just as you can extend your repayment period to lower your monthly mortgage payment, you can also shorten your loan term to pay off your mortgage faster. Your monthly payment amount will increase with a shorter repayment period, but you’ll eliminate your debt sooner and save on interest in the long run. For example, refinancing a $250,0000 loan with a 5% interest rate from a 30-year term to a 15-year term would save you $127,282 in total interest while shaving 15 years off your loan.
• Access equity for cash. If you’ve built up equity since refinancing your home, you can do a cash-out refinance. This type of refinance allows you to access some of your equity to fund home renovations, consolidate high-interest debts, or achieve other financial goals. With cash-out refinancing, you refinance your loan for the amount of your existing mortgage balance, plus the amount you wish to borrow from your equity. You typically must keep a minimum of 20% equity after refinancing.

Refinancing makes sense when you can save money or improve your home’s value. But refinancing isn’t always advantageous, especially in the following circumstances:

• You’re funding a big purchase. Using a cash-out refinance to pay for a new car, boat, or RV probably isn’t the smartest move, especially when you consider that these purchases usually depreciate.
• Your interest rate drop isn’t significant. A general rule of thumb is to refinance when you can get an interest rate that’s at least 0.75% lower than what you’re currently paying. If the interest rate is only slightly better, the amount you’ll save may not make up for the closing costs you’ll pay for the mortgage refinance.

What to know before refinancing again

You can enjoy many advantages when refinancing your home loan, whether you refinance once or multiple times. Still, it pays to consider the additional costs and potential issues you may encounter:

• You'll pay closing costs. Mortgage refinance closing costs commonly run between 2% and 5% of the total loan amount, and the average cost to refinance is nearly $5,000, according to Freddie Mac. You’ll have to pay these costs with each refinance. Before you decide to refinance, make sure the savings benefit of refinancing exceeds your closing costs.
• You may have a prepayment penalty. Although prepayment penalties are becoming less common, some lenders still charge a fee if you pay off your loan early. Review your loan documents or speak with your lender to see if your loan has a prepayment penalty.
• It may not improve your situation. Any time you refinance, you must qualify for a mortgage loan all over again. If your financial picture has improved, you may qualify for the best rate and terms. But if your credit score or income is lower than it was the last time you refinanced, you might not receive the best interest rates, which could offset your potential savings.
• It could affect your credit score. If you’re comparison shopping for the best mortgage loan offers, you may have multiple hard inquiries from lenders. These types of inquiries can cause a temporary dip in your credit score. Refinancing also involves closing your original mortgage loan account, which can affect your credit depending on the loan amount and age of the loan.

HERE’S WHY YOU SHOULD (AND SHOULDN’T) REFINANCE YOUR MORTGAGE

Alternatives to refinancing your home again

If you think refinancing your home again might not be your best option, you have alternatives at your disposal.

Home equity loan or HELOC

A home equity loan or home equity line of credit (HELOC) can also give you access to the equity in your home. With a home equity loan, you get a lump sum upfront that you can use to consolidate debt or pay for a home renovation project. On the other hand, a HELOC is a revolving credit line that allows you to borrow smaller amounts as needed, which can help you keep your monthly mortgage payments lower and steer clear of unnecessary debt.

Just remember to make your payments on time, or you could risk your home — home equity loans and HELOCs are secured debts that require you to put up your home as collateral.

Personal loan

Personal loans are another financing option that provides you with funds to consolidate debt, pay for medical bills, or use for almost any purpose. Personal loans come with competitive interest rates that are usually lower than those for credit cards. While the interest rates for personal loans aren’t as low as with home equity loans or HELOCs, you won’t have to risk your home as collateral.

But you’ll want to keep a keen eye on fees, as personal loans can come with origination fees and prepayment penalties.

Should you refinance your home again?

Refinancing is only worth it if you’re sure you’ll save money or reach the break-even point where your savings outweigh the costs you’ll pay to refinance your loan.

You can run the numbers with Credible’s mortgage payment calculator to see if refinancing makes sense for you. If you choose to refinance your mortgage again, it’s wise to shop around with refinance lenders to discover the best mortgage rates and loan terms for your financial situation.