Refinance Waiting Period

What is the waiting period to refinance after previous refinancing or buying a new home? Imagine this scenario.  You just refinance your home or just finished closing on the purchase of a new home.  With mortgage rates strike record lows, you discover much lower mortgage rates to lower your payments.  What should you do?  How long do you have to wait to refinance again?  The answer is – it depends on the type of mortgage you have.  There is no waiting period for certain mortgages, and there are some that require a waiting period between 6 and 7 months.

Conventional Loan Refinance Rules

If you have a conventional loan refinance mortgage that is backed by Fannie Mae or Freddie Mac then you might be able to refinance right away subsequent to closing on your new purchase or a previous refinancing.  In general, many lenders have a 6-month seasoning period before you can refinance with them again.  If you want to stay with the same lender, then you will have to abide by this rule.  On the other hand, if you want to further lower your mortgage rate then you will have to shop around and refinance with a different lender.  This is one way to overcome this rule.  Although it is infrequent, some lenders still charge prepayment penalty fee for early pay-off.  Thus, make sure you check with your existing lender regarding prepayment penalty fee before proceeding.

Government-Backed Mortgage Rules

If you have a government-backed mortgage such as FHA, USDA, and VA loans, then the rules are different.  While the government-backed mortgage streamlines the refinancing process to give you lower rates, less time, and less paperwork. It requires you to wait at least 6 to 7 months before using a streamline refinance again.  Additionally, you must have a recent history of on-time mortgage payments.

Cash-out Refinance Rules

With cash-out refinance rules, you will typically have to wait at least 6-months before refinancing again, whether you previously use a conventional or government-back mortgage loan.

Regardless of the waiting period, it is never too late to refinance if the rates will save you money in the long-run.  Think of a mortgage as a contract, and as soon as you get a better deal then take advantage of it.  This will save you thousands of dollars and reduce the cost of borrowing.

As always, it is highly recommended that you shop around with different lenders to determine which one will give you the best rates and low costs.  Understand what “no closing costs” mean before you commit to it.  Determine your financial goals and how long you will keep your property.  Use a loan amortization calculator to understand the short-term and long-term costs of your mortgage loan.  The process can be dauting and time-consuming, but it is worth it to save money and reduce your cost of borrowing.  There are a lot of loan amortization calculators available online.  Use them to compare the overall costs of your loan.