How Often Can You Refinance Your Home?
Over the past couple of years, there has been a housing market as well as a refinancing boom. Maybe you’ve already refinanced but aren’t sure if you can do it again. In this article, we’re answering the question of ‘How often can you refinance your home?’
Did you know that you can refinance your home as much as you’d like if it makes financial sense? With lower interest rates on your home, refinancing allows you to have a lower mortgage payment. Think of the money you’ll be saving and where you can put that extra money after you refinance!
Is There a Limit to Refinancing a Mortgage?
Technically, no, there is not a limit to refinancing your mortgage. Take note though that there are mortgage lenders who have refinancing requirements.
If you decide to refinance your home more than just once, there are several pros to doing so.
Pro #1: Getting a Lower Interest Rate
This one is obvious as when people think of refinancing, they generally think of getting a lower interest rate on their monthly mortgage payments. Therefore, that saves you money now and money in the future. Think about the interest you’ll be paying on a 30-year loan at a 4.5% rate compared to the significant cut in paying interest at a refinanced 3.5% loan rate. This makes the most financial sense to your wallet.
Pro #2: Getting Rid of PMI (Private Mortgage Insurance)
According to Rocket Mortgage, PMI is “a special type of insurance that protects your lender if you default on your loan.” If you did not put 20% down on your home when you first bought it, PMI gets baked into your mortgage until you reach 20% of the home’s equity threshold. By refinancing, you can see where you are with that PMI threshold and ask your lender to cancel it if you’ve met the 20% of your home’s equity.
Pro #3: You Can Change a Loan Term
The nice thing about refinancing your home is that you can choose to go from a 30-year loan term down to a 15-year loan or vice versa, depending on your financial situation. This is another way refinancing can save you money in the present and the future.
What to Consider When Refinancing
The final thing we’ll be quickly discussing to answer, ‘How often can you refinance your home?’ is that while there are many advantages to refinancing, you must remember there are other stipulations when doing so. The first one is that you may have to pay closing costs again. One of those costs is a title search and title insurance which proves to the new lender that you are the only party with rights to the property.
Other closing costs would include appraisal fees, attorney review fees, closing fees, etc. You can expect to spend about two to three percent of your total loan amount on closing costs.
Another thing to consider is credit. Will you meet your new lender’s credit standards? Has your credit score decreased or has your debt-to-income ratio increased? Consider these factors as well because the new lender will do so.
The Bottom Line
So just how often can you refinance your home? Ultimately, as often as you think it makes sense. There is no limit when refinancing, especially when it saves you money.
And when you do refinance, consider going with a trustworthy, professional, and experienced team such as Madison Settlements so you can have a smooth refinance transaction from start to finish.