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How many times can you refinance your home?
Refinancing your mortgage means trading your existing loan for a brand-new one, ideally with more favorable terms, such as a lower interest rate. If you’ve built up equity in your home, you can even use a cash-out refinance to put money from your home equity toward paying for a home improvement project or other financial needs.
But what if you’ve already refinanced before — can you refinance again? And is there a limit on how often you can refinance a home? Here’s everything you need to know.
In this article:
Learn more: The pros and cons of refinancing your home
How often can you refinance your home?
If you’re wondering how many times you can refinance your home, the short answer is: There’s no limit. You can refinance however many times you want after your most recent mortgage refinance — as long as it makes financial sense for you.
However, depending on the type of mortgage refinance and the lender you work with, there might be a waiting period that dictates how soon you can refinance again after closing on a loan. These are the general rules of thumb, though lenders sometimes set their own requirements:
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Conforming loan refinance (no cash out): No waiting period
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Jumbo loan refinance (no cash out): No waiting period
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Cash-out refinance (conforming, jumbo, FHA): 12-month waiting period
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Cash-out refinance (VA): 210-day waiting period
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FHA or VA streamline refinance: 210-day waiting period
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USDA loan refinance: 12-month waiting period
As long as you adhere to the mortgage refinancing waiting periods and meet the mortgage lender’s requirements, you can refinance your home as often as you want.
Dig deeper: Is now a good time to refinance your mortgage?
Costs to consider if you want to refinance a home multiple times
While there’s no cap on how often you can refinance your home, remember it’s not free. Closing costs and potential prepayment penalties can quickly add up and cancel out the benefits of refinancing — especially if you move before reaching your break-even point. Closing costs are typically anywhere from 2% to 6% of your remaining loan balance, and you’ll have to pay these costs each time you refinance.
Here’s a detailed breakdown of the costs you should factor into your refinancing budget.
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Origination fee. A lender charges an origination fee to process your application and underwrite the loan. It typically costs between 0.5% and 1% of the mortgage loan amount.
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Credit check fee: Lenders may charge you a small fee when pulling your credit report.
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Appraisal fee. An appraisal fee covers the cost of having an appraiser estimate your home's market value. It’s typically around $400, though the cost will vary depending on your location and house size
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Discount points. Discount points are fees paid up-front to the lender in exchange for a lower rate over the life of the loan. One discount point costs 1% of the loan amount, and each point usually lowers your mortgage's interest rate by 0.25%.
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Inspection fee. Most lenders will require you to schedule a home inspection with a licensed inspector to assess the condition of your home. According to home services website Angi, the average home inspection cost is $343.
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Title search and insurance. When you refinance, your new lender must verify that you are indeed your property’s owner by performing a title search, which typically costs around $200. You’ll also need to purchase a lender’s title insurance, which protects your new lender from issues that may arise with property titles. According to Fannie Mae, title insurance costs vary by state, but you can expect to pay up to 1% of the home’s price.
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Prepayment penalties. If your current loan comes with prepayment penalties, you may have to pay a fee if you refinance before a certain amount of time has passed. A prepayment penalty can cost up to 2% of your loan’s outstanding balance.
You may have other refinance closing costs, such as a recording fee or attorney fees if you choose to hire a real estate lawyer.
Read more: How long does it take to refinance a house?
Does it make financial sense to refinance multiple times?
Whether it makes sense to refinance more than once depends on the purpose of your refinance and your break-even point. Here are two examples for a better understanding.
Scenario 1:
Let’s say you’re using a traditional rate-and-term refinance to lower your monthly payments. After crunching the numbers, you estimate you’ll save $60 monthly by refinancing. If your closing costs come out to $7,200, it’ll take you 120 months, or 10 years, to break even. Refinancing would probably not make financial sense if you only plan to stay in the home for another five years. But if you intend to stay for more than a decade, refinancing could save you money in the long run.
Scenario 2:
However, if you’re using a cash-out refinance to pay for a home improvement project, calculating your break-even point would be different and more complex. You’ll have to factor in the closing costs, the cost of the home improvement project, and the amount you expect to get back in added value when you eventually sell the house after refinancing.
Each time you refinance, crunch the numbers to see your break-even point and how long it will take to recoup the refinance costs. If you’re unsure what those numbers look like, talk to a loan officer, lender, or mortgage broker to help you decide if refinancing is the right financial move.
Dig deeper: How to know when to refinance a mortgage
Does refinancing multiple times hurt your credit score?
Yes, refinancing your mortgage multiple times could temporarily affect your credit score as refinancing is considered to be a credit application and registers as a “hard inquiry” on your credit report. Simply put, whenever a mortgage lender conducts a hard credit check to see if you’re eligible to refinance your home, that inquiry is recorded on your credit report and could drop your credit score by a few points.
According to Equifax, one of the three major credit bureaus, hard inquiries may stay on your credit report for two years, though they typically only affect your credit score for one year.
Alternatives to refinancing your home again
Maybe you need extra cash or monthly savings but refinancing your home again doesn’t make financial sense right now. If so, consider these options instead.
Home equity loans
One way to tap your home equity without refinancing is by taking out a home equity loan. This is a type of second mortgage — meaning you’ll make payments on both your original mortgage and the home equity loan — that lets you borrow against the equity in your home. When you take out a home equity loan, the lender will provide you with a single lump-sum payment, which you repay over a set period of time with fixed monthly payments.
Dig deeper: What is a second mortgage, and how does it work?
HELOCs
Home equity lines of credit (HELOCs) are similar to home equity loans in that they are second mortgages that allow you to access the equity you’ve built up in your home without refinancing. The main difference is that they work more like a credit card, and you don’t get the money all at once. Instead, you’re given a credit limit, and you can borrow, repay, and re-borrow as often as you like up to that limit. You’ll only pay interest on the amount you use, which is convenient if you’re not sure how much money you will need up-front.
Read more: How to decide between a home equity loan and HELOC
Personal loans
There are two types of personal loans: unsecured and secured. Unsecured personal loans don’t require you to provide any collateral for your loan, like a house or car, but you may have to pay a higher interest rate since they’re riskier for lenders. Secured personal loans require you to offer up something of value as collateral in case you can't repay what you owe. This security reduces the lender's risk, leading to lower interest rates and more favorable loan terms.
Mortgage recast
If your reason for refinancing is to lower the monthly payments on your existing mortgage, consider a mortgage recast instead. Here’s how it works: With a mortgage recast, you pay a lump sum toward the principal balance. Then, your mortgage lender will reamortize your home loan based on the lower loan balance, resulting in a new lower monthly payment. Unlike refinancing, you’ll keep the same interest rate and loan term length.
How many times can you refinance a home? FAQs
Is there a downside to refinancing multiple times?
The biggest downside to refinancing your home multiple times is that you’ll need to pay multiple closing costs, which typically range from 2% to 6% of the loan amount. The more often you refinance, the longer it may take to recoup the new loan's closing costs.
What is the best time to refinance your home?
If you want to lower your monthly mortgage payments, a great time to refinance your home is when market refinance rates have fallen below your current mortgage’s interest rate. For example, market rates might be lower now if you bought your home in the last couple of years. But remember, everyone’s financial situation is different. It can be a good move as long as refinancing saves you money in the long term or offers you some sort of financial benefit.
Do I need a down payment to refinance?
You don’t need to come up with a down payment to refinance your mortgage, but you’ll need to budget for closing costs.
This article was edited by Laura Grace Tarpley.
