You have a home loan, but are you happy with its terms? Sometimes, it makes sense to refinance or change your mortgage. But how many times can you refinance a house, and how do you start the process? Our team answers these questions and more below.
What Is Home Loan Refinancing?
Home loan refinancing means replacing your existing mortgage with a new loan. In other words, you’re taking out a new mortgage to pay off your current mortgage.
Why might you do this? Every homeowner has different reasons for refinancing. However, the most common reasons for refinancing a home loan are:
These are just some reasons why you might change a home loan’s terms. At Scout Mortgage, we can help you explore your options to decide if you should consider refinancing.
How Often Can You Refinance Your Home?
How often can you refinance your house? The short answer is this: as often as you wish. There is no limit to how many times you can apply for refinancing.
That said, just because you can refinance your home loan multiple times doesn’t mean it’s always the best move. Ideally, you will find a mortgage product you are happy with – at least in the short to medium-term.
Does Refinancing Hurt Your Credit Score?
Well, it depends. Here’s what to consider.
Refinancing means applying for a new loan. Loan applications can temporarily impact your credit score.
If your application is refused, the lender’s credit search may affect your credit score. The same can be said for multiple failed applications.
Should you fail to make the new monthly mortgage payments, your credit score could drop.
Do you want to refinance because you can’t afford your monthly mortgage payments? Consider seeking financial advice before applying for a new loan product.
How Many Mortgage Payments Should You Make Before Refinancing?
There is no specific number of payments you must make before refinancing. However, there is one exception: FHA loans. If you want to apply for FHA’s Streamline Refinance Program, you must wait at least 210 days before applying.
In other cases, your lender may impose a “wait” period of up to six months before they will consider a new loan. There’s no reason you can’t shop around for a new loan product with another lender in the meantime, though.
Advantages of Refinancing a Home Loan
Depending on your circumstances, there are some real positives to refinancing a mortgage.
Refinancing gives you the flexibility to shorten or lengthen a loan’s term. This can help you make payments that are more convenient for you. It can also save you interest.
Cash-out refinancing can free up cash quickly. This is helpful if you need capital urgently e.g. for debt consolidation.
Refinancing with a new interest rate can make your home loan cheaper. You could save money over the loan’s lifetime.
The potential savings and flexibility can make financial sense for some homeowners.
The Downsides of Mortgage Refinancing
Just as there are upsides to refinancing, there are some potential downsides.
If you are shortening the loan term, your monthly payments could increase. For example, if you refinance a 20-year loan to a 10-year loan, it’s likely you will pay more each month.
If you choose cash-out refinancing, there’s a risk you will reduce your home’s value. As an example, if you have $70,000 in your home, and you cash out $30,000, you now only have $40,000 equity in the property.
Refinancing can be time-consuming. There are also often costs involved. Depending on your reasons for refinancing a house, it may not be the best option.
You may be charged a prepayment penalty for paying off part of the loan early.
Unsure if mortgage refinancing is right for you? Our friendly team of mortgage professionals can help.
How Do You Refinance a Mortgage?
It’s simple to start the refinancing process.
How Long Does It Take to Refinance a Home?
Typically, it takes up to 45 days to complete the refinancing process. The time depends on various factors, including your credit score, the loan terms, and your lender’s policy.
Your lender can explain how long the process will take, depending on your loan terms.
Explore Your Home Loan Options Today!
Are you looking to refinance your home loan? Scout Mortgage can help!
It’s our mission to make finding home loans easy. Our team will do everything possible to find you a competitive quote and a quick close. Whether you need your first home loan or a refinance quote, let us assist.
Use our refinance calculator to explore your options, based on your budget. Or contact us now for a free, quick quote!