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Did you refinance relatively recently only to see interest rates fall again? With mortgage refi rates still near record lows (some 30 year rates are below 3% and some 15 year rates are below 2.5%, as you can see here), you may be wondering how often you can refinance. The answer, says Holden Lewis, home and mortgage expert at NerdWallet, is often that you can refinance as many times as you want. “The main exception is cash-out refinancing. In most cases, you will need to have your mortgage for six months before you can refinance it for more than you owe, ”says Lewis. Find the best mortgage refinancing rates near you here.
With today’s low prices, more consumers are doing back-to-back refis. In fact, data from Freddie Mac shows that there has been an increase in repeat refinances over the past year, including loans that have been refinanced twice or more within 12 months: “In 2020, 10.1% of refinances were repeat refinances, up from 7, 8% in 2019, ”writes the mortgage giant.
Is Repeat Refinancing Right For Me?
With prices close to historic lows and house prices at record highs, many loans a year and older could be good refinancing candidates, said Jonathan Lee, senior director of mortgage sales at Zillow Home Loans. “High property values mean that the difference between your mortgage rate and a refinance rate can be up to 0.25% in some cases and still makes financial sense,” says Lee. High home value could mean you can get rid of personal mortgage insurance provided you have 20% equity in your home. You might also consider shortening your loan term, for example from 30 years to 15 years, which could save you thousands of dollars over the life of the loan.
But do the math, because refinancing doesn’t always make sense, and the general rule is that you want to save about a half to three quarters of a percentage point to make it worth it, says Lewis. And also look at your break-even point so you can make sure you amortize the cost of the refinance before you sell the house, says Denny Ceizyk, LendingTree executive: “Break-even is calculated by Dividing the total loan is cost equal to the savings. If the cost of a refinance is $ 5,000, which saves $ 200 per month, then the refinance break-even point is 25 months. If the homeowner plans to keep their home for at least 25 months, the cost will be amortized and the refinancing makes sense, ”says Ceizyk.
Are there any restrictions on refinancing?
In addition to the fact that with a cash-out refinancing you usually have to wait around six months to carry out another refinancing, other regulations may apply. Ceizyk says it’s important to note that some government-backed FHA, VA, or USDA loans may require a wait between refinances. Find the best mortgage refinancing rates near you here.