How Often Can You Refinance Your Home?

iQuanti: In the United States, there is no legal limit to how often you can refinance your home. Each lender has different rules for how often you can refinance, and depending on your circumstances you may be able to save more. A mortgage refinance from Discover or another major lender can help you save money even if you’ve refinanced before.
When you refinance often is more of a factor than the amount of times you refinance. Ultimately your ability to refinance is going to depend on your current circumstances, and generally speaking, it’s rare to be able to refinance your home multiple times in a short period of time (five years or less) or to find it beneficial to do so.
Do you still qualify for a refinance?
If your credit score has lowered, if you’ve missed a payment on your mortgage in the last 6-12 months, or if you haven’t built a significant amount of equity in your home, you may not be able to refinance… yet.
Qualifying for your first mortgage may be a milestone moment in your personal life, but qualifying for your next mortgage always depends on your current circumstances. If you’ve improved your credit score, built equity, and made timely payments, you’re more likely to qualify for a mortgage refinance that will be worth your while.
How much equity do you have?
If you’re opting for a cash-out refinance, the amount of equity you have in your home will be a major factor. Each time you cash-out refinance, you diminish the equity you’ve built in your home. The less equity you have, the less you can borrow, so even one cash-out refinance could deplete your equity to the point where you’ll no longer qualify for another refinance.
Forecast your fees and penalties
In order to make an informed decision to refinance, you’ll want to forecast the sum of all of the fees you might need to pay for closing costs. These often include application fees, appraisal and inspection fees, attorney fees, etc.
Some lenders also have prepayment fees, which take effect if you pay off your mortgage before the term ends. These can be quite costly if, for example, the penalty requires you to pay what you would have saved in interest!
Every lender has different terms, and it’s important to understand what your options are and what restrictions your new mortgage could impose on you. It’s not uncommon to find terms that will incentivize you to stay with a mortgage and not pay it off too soon, so make sure you sign up for a mortgage term that’s aligned with your plans and goals.
The bottom line
Refinancing can save you money, but only if the savings will offset your upfront investment. Sometimes these fees are an obstacle to savings, and sometimes they’re just a speed bump. In general, you’re more likely to save if you’ve made some progress paying off your current mortgage and plan to stay in your home for a long period of time.
Source: iQuanti, Inc.