Are you having trouble making your mortgage payment each month, a refinance can help you manage your money more effectively and help lower your interest rate, remove private mortgage insurance or take cash out of your equity.

But there is a catch: What if you’ve already refinanced your home loan? Can you, or should you, do it again? We’ll look at how often you can refinance and help you decide whether doing so more than once is the best decision.

• Is it Bad to Refinance Your Home Multiple Times?
• How Soon After Refinancing Can I Refinance Again?
• How Many Times Can You Refinance a House in a Year?
• Does Refinancing Hurt Your Credit?
• How Soon Can I Refinance my Home After Purchase?
• Refinance Calculator
• Reasons Not to Refinance Your Home
• How Often Can You Refinance Your Mortgage in Canada?
• How Often Can You Refinance Your Home in Texas?
• How Often Can You Refinance Your Home With a VA Loan?
• How Long Should You Stay in Your House After Refinancing

Is it Bad to Refinance Your Home Multiple Times?

The process of refinancing a mortgage involves taking out a new loan and using the funds to pay off the existing loan. You can refinance with the same lender or work with a different one.

Technically, there’s no limit to how many times you can refinance your mortgage. However, there may be a limit to how often you can do it.

Known as a “seasoning requirement,” lenders may institute a waiting period before borrowers are approved for refinancing. Typically, you’ll need to wait six to 12 months between getting a mortgage and seeking to refinance. If you’re refinancing to eliminate private mortgage insurance, you may have to wait two years. Even so, this requirement depends on the lender, and there may be exceptions.

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Cash-out refinancing, in particular, often requires borrowers to wait at least six months from the last time they refinanced before they can be approved again, even if they’re working with a different lender.

Government-backed loans also usually have waiting periods. An FHA Streamline refinances, for example, requires that at least six full months have passed since the first payment due date on the mortgage, and at least 210 days have passed from the mortgage closing date.

Below are some of the ways you could benefit from refinancing.

1. Get a Lower Interest Rate

If you took out your mortgage a while ago, when interest rates were higher or your credit score wasn’t in great shape, you could stand to save quite a bit of money by refinancing. For example, a 30-year mortgage of $100,000 with a 6% interest rate would cost you $115,838 in interest over the life of the loan. If that rate dropped to 4%, you’d save $43,968 over 30 years.

2. Reduce Monthly Payments

Maybe you can’t qualify for a lower interest rate, but you still need to reduce your monthly payments to open up more cash flow. In this case, you can refinance to a longer term, extending the amount of time you have to pay off the loan and decreasing the amount you’re required to pay each month.

Keep in mind that with this option, you will end up spending more in interest over the life of your loan, because you’ll spend more time paying it off.

3. Pay Off the Loan Faster

On the other hand, maybe you want to pay off your loan even faster. By refinancing to a shorter repayment period (and perhaps a lower interest rate, too), your monthly payments will increase—but you’ll get rid of your debt sooner and save money in the process.

Take our earlier example of a $100,000 30-year mortgage with a 6% interest rate. If you cut the repayment period to 20 years, the monthly payment would increase from $600 to $716 (in principal and interest), but you’d shave off 10 years and $43,895 in interest from the loan.

How Soon After Refinancing Can I Refinance Again?

How soon you can refinance depends on the type of mortgage loan you have, and the type of refinance you’re planning to use.

Conventional loan refinance rules

If you have a conventional mortgage — one backed by Fannie Mae or Freddie Mac — you might be able to refinance immediately after closing your home purchase or a previous refi.

Keep in mind that many lenders have a six-month “seasoning period” before a current borrower can refinance with them. So you’ll likely have to wait if you want to refinance with the company you’re already using.

But you can get around that six-month rule by simply shopping around and refinancing with a different lender.

While it’s rare, some lenders charge a prepayment penalty fee that could derail your refinance plans. Check to see if your existing loan has a prepayment penalty clause before moving forward.

It’s recommended that you shop around before refinancing in any case, to make sure you’re getting the lowest rate possible.

Cash-out refinance rules

If you’re hoping to take cash out, you’ll typically have to wait six months before refinancing regardless of the type of loan you have. In addition, a cash-out refinance typically requires you to leave at least 20% equity in the home.

So before you can use a cash-out refi, you need to be sure you’ve built up enough equity to make one worthwhile.

Government loan refinance rules

The rules are a little different if you have a government-backed mortgage, which includes FHA, VA, and USDA loans.

With a government loan, you have the benefit of being able to use a streamlined refinance. Streamline refinancing cuts down the time and paperwork associated with a refi so you can get a lower rate, faster.

However, you have to wait 6-7 months before using a streamline refinance. And you must have a recent history of on-time mortgage payments.

How Many Times Can You Refinance a House in a Year?

This is a question that several home owners ask when considering whether to refinance their loan for the second or third time. Theoretically, you can refinance your loan as many times as you like.

There are no rules governing the number of times you can refinance a house. Usually, the lenders follow some guidelines around the period before they can offer a refinancing solution, but even that varies from institution to institution and it is often negotiable.

However, there are some practical considerations as to how many times you should opt for mortgage refinancing and your reasons to refinance should be financially sound.

There could be several reasons to consider refinancing your mortgage; a few common ones are listed below:

• Save money on mortgage interest – You can opt for refinancing your mortgage if you are getting lower rates than on your existing mortgage, which will save you money on your interest amount.
• Switch from a variable to fixed rate mortgage – If you are getting a good fixed interest rate and your current variable rate is high or likely to increase, it may be a good idea to refinance your mortgage with a fixed rate option.
• Vary your mortgage payback period – If you want to payback your mortgage faster or over a longer period, you could consider refinancing your mortgage with a more suitable loan.

Home owners look to refinance their mortgage for direct financial benefits. However, it is always a good idea to carefully assess your costs of refinancing before opting for it. Often, the switching costs like the loan prepayment penalty are quite high and have a long payback period, in which case it makes little sense to refinance the mortgage.

Even if you are refinancing to shorten your mortgage payment period, it is important to check the financial benefit of the option. Consulting a mortgage broker or consultant is advisable to look into these aspects.

Does Refinancing Hurt Your Credit?

Refinancing can lower your credit score in a couple different ways:

1. Credit check: When you apply to refinance a loan, lenders will check your credit score and credit history. This is what’s known as a hard inquiry on your credit report—and it can temporarily cause your credit score to drop slightly.

However, the money you save through refinancing, especially on a mortgage, usually outweighs the negative effects of a small credit score dip. And as you pay off your new loan over time, your credit scores will likely improve as the result of a strong payment history.

2. Multiple loan applications: To find the best loan terms when refinancing, you’ll probably apply to several different lenders to see which one gives you the lowest interest rate. To keep all of these hard inquiries from hurting your credit score, make sure to submit all your loan applications within a short period.

Most credit scoring models treat loan inquiries between a 14-day to 45-day period as one inquiry, minimizing the hit to your credit score. Applying for different loans over a period of several months, on the other hand, could have a lasting negative effect on your credit score.

3. Closing an account: The loan you are refinancing will be closed, which can also lower your credit score because you are closing a long-standing credit account. However, some credit scoring models will take into account your payment history on the closed loan.

As long as the closed account was closed in good standing, this lessens the hit to your credit score. In addition, as you pay down the new loan, your credit score should improve again.

How Soon Can I Refinance my Home After Purchase?

The answer may be “sooner than you think,” although it depends on the refinance program you’re looking for, the loan type, and if any penalties apply. It may seem foolish to refinance soon after you went through the process and paid closing costs on your original mortgage, but in some cases, it could save you big money over the life of the loan. 

Although you can technically refinance immediately, some lenders may require you to wait months before refinancing with the same company. If taking advantage of better terms is your main consideration, the path may be clearer. Here are some mortgage refinance rules and time frames to consider:

• A cash-out refinance, in which you are borrowing extra funds against your home equity, typically has a six-month waiting period (and you probably don’t have that much equity invested in that short timeframe anyway).
• If you went into mortgage forbearance or had your original loan restructured to allow you to skip or temporarily reduce monthly payments, you may be required to wait up to 24 months before refinancing.
• If your original mortgage was funded with an FHA loan and you want to refinance it with an FHA Streamline Refinance, you’ll be asked to wait 210 days from the original closing date.
• It’s typically easier to qualify for a straightforward rate and term refinance as they rarely have a waiting period.
• Even if your current mortgage rate is only slightly higher than today’s rate, a small drop could save you thousands of dollars over the life of your loan. You’ll reap more long-term benefits if you refi sooner rather than later when rates might not be this good. 
• Some loan products have penalties for prepayment if you refinance your loan within the first three to five years.

Refinance Calculator

Your total savings during the time you plan to stay in your home is made up of two parts: cash savings and the difference in the amount you’ll still owe on your new mortgage.

What are cash savings? That’s the difference between your current monthly mortgage payments and your new monthly mortgage payment (minus the amount you’ll need to pay for closing costs — about 3% of the loan). In other words, it’s cash in your pocket.

What’s the difference in the amount you’ll still owe? That’s the difference between the amount of principal on your current mortgage and the amount of principal you’ll owe on your new loan when you refinance.

The breakeven period represents the number of years you’ll have to make the new monthly payment before you recoup the costs of refinancing.

Tip: It typically makes sense to refinance your mortgage if you’re planning to stay in your home for longer than the breakeven period.

Reasons Not to Refinance Your Home

It makes sense to refinance and save with lower rates, right? That may be true, but there are many factors you need to consider before signing on the dotted line. And there are cases when refinancing isn’t the logical choice because it may have an impact on your financial situation. You might want to explore other real estate investment opportunities first.

We will now look at four of the most common reasons why you shouldn’t refinance your mortgage.

1. A Longer Break-Even Period

One of the first reasons to avoid refinancing is that it takes too much time for you to recoup the new loan’s closing costs. This time is known as the break-even period or the number of months to reach the point when you start saving. At the end of the break-even period, you fully offset the costs of refinancing.

There’s no magic number that represents an acceptable break-even period. There are a couple of different factors you have to consider to come up with a viable estimate. It depends on how long you plan to stay in the property and how certain you are about that prediction.

To calculate your break-even period, you’ll need to know a couple of facts. The closing costs on the new loan and your interest rate are the most crucial. Once you know the interest rate, you can figure out how much you’ll save in interest each month.

You should be able to get an estimate of these figures from a lender. So let’s suppose the closing costs to refinance amount to $3,000 and your potential monthly savings are $50. Here’s how to calculate your break-even period:

• Break-even period = closing costs ÷ monthly savings
• $3,000 ÷ $50 = 60

In this instance, it will take you 60 months or five years to reach your break-even period.

2. Higher Long-Term Costs

Once you’ve spoken to your bank or mortgage lender, consider what refinancing will do to your bottom line in the long run. Refinancing to lower your monthly payment is great unless it puts a big dent in your pocketbook as time goes on. If it costs more to refinance, it probably doesn’t make sense.

For instance, if you’re several years into a 30-year mortgage, you’ve paid a lot of interest without reducing your principal balance very much. Refinancing into a 15-year mortgage will probably increase your monthly payment, possibly to a level that you won’t be able to afford.

If you start over again with a new 30-year mortgage, you’re starting with almost as much principal as last time. While your new interest rate will be lower, you’ll be paying it for 30 years. So your long-term savings could be insignificant, or the loan may eventually cost you more. If lowering your monthly payment saves you from defaulting on a current, higher payment, you might find this long-term reality acceptable.

You might also want to consider the opportunity cost of the refinancing process. It takes time and effort to refinance a mortgage. You might have more fun and make more money doing home improvement projects, getting a certification, or looking for clients.

3. Adjustable-Rate vs. Fixed-Rate Mortgages

Refinancing to a lower interest rate doesn’t always result in substantial savings. Suppose the interest rate on your 30-year fixed-rate mortgage is already fairly low, say 5%. In that case, you wouldn’t be saving that much if you refinanced into another 30-year mortgage fixed at 4.5%.

Once you factor in the closing costs, your monthly savings wouldn’t be significant unless you have a mortgage several times larger than the national average.

So is there an alternative? Getting an adjustable-rate mortgage (ARM) may seem like a great idea because they typically have the lowest interest rates. It may seem crazy not to take advantage of them, especially if you plan to move by the time the ARM resets.

When rates are so low—by historical and absolute standards—they aren’t likely to be significantly lower in the future. That means you’ll probably face substantially higher interest payments when the ARM resets.

Suppose you already have a low fixed interest rate and you’re able to manage your payments. In that case, it’s probably a better idea to stick with the sure thing. After all, an adjustable-rate mortgage is usually much riskier than a fixed-rate mortgage. Sticking with a low fixed rate may save you thousands of dollars in the end.

4. Unaffordable Closing Costs

There’s no such thing as a free refinance. You either pay the closing costs out of pocket or pay a higher interest rate. In some cases, you’re allowed to roll the closing costs into your loan. However, you are then left paying interest on closing costs for as long as you have that loan.

Think about the closing costs and figure out how each one of these cases fits into your situation. Can you afford to spend several thousand dollars right now on closing costs? Or do you need that money for something else? Is the refinance still worthwhile at the higher interest rate?

If you’re looking at rolling the closing costs into your loan, consider that $6,000 at a 4.5% interest rate will cost thousands of dollars over 30 years.

How Often Can You Refinance Your Mortgage in Canada?

Theoretically, you can refinance your loan as many times as you like. There are no rules governing the number of times you can refinance a mortgage. Usually the lenders follow some guidelines around the period before they can offer a refinancing solution, but even that varies from institution to institution and it is often negotiable.

Getting a lower interest rate isn’t the only reason to refinance a mortgage. Mortgage refinancing can also be used to access equity in your home, and to consolidate your debts.

1. Getting a lower interest rates

Refinancing to get a lower interest rate can save you a lot of money over time, depending on the prepayment penalty and the size of your outstanding mortgage.

If you hold a variable rate mortgage, then expect to pay a penalty of three months interest, and if you hold a fixed-rate mortgage, then you will pay the greater of three months interest or interest rate differential penalty (IRD). Don’t let penalties deter you – understanding the numbers helps you calculate whether a refinance will save you money.

2. To access equity (cash) in your home

By refinancing your mortgage, you may be able to access the equity in your home. You could potentially access up to 80% of your home’s value, less any outstanding debt. That’s extra money for investment opportunities, home renovations, or your children’s education.

There are several ways to access this equity including breaking your mortgage, taking on a home equity line of credit (a HELOC), or blending and extending your mortgage with your current lender.

3. Refinancing to consolidate debt

If you have enough equity in your home, you might be able to use built-up equity in your home to pay-out high-interest debt through a mortgage refinance. For example, if you have a number of outstanding debts, such as a car loan, a line of credit, or credit card bills, you may be able to consolidate this debt through the variety of mortgage refinance options available.

How Often Can You Refinance Your Home in Texas?

A Texas cash-out refinance loan is also called a Section 50(a)(6) loan. With this option, you refinance your current mortgage while also tapping into your home’s equity. This tapped equity converts into cash paid out at closing. The cash can be used for anything you’d like, from home improvements to paying off higher-interest debt.

A Section 50(a)(6) loan can be a good option if you want to refi and need extra cash. You can get a fixed interest rate. That offers more stability and better peace of mind than a home equity line of credit’s (HELOC) variable rate. Plus, your mortgage interest may be tax deductible. (Check with a professional first, as recent changes to the tax law apply.)

“Any homeowner is eligible for this Texas cash-out refinancing loan. You simply need to have earned more than 20 percent equity in your home,” says Herb Ziev, a Certified Mortgage Planning Specialist in Texas.

Mary Dinkins, regional vice president with Cornerstone Home Lending in Dallas, says any primary residence qualifies so long as it doesn’t exceed 10 acres.

“Rural properties can be considered up to 100 acres,” she adds.

How Often Can You Refinance Your Home With a VA Loan?

There is no limit to how many times you’re allowed to refinance a mortgage, though a lender may enforce a waiting period between when you close on a loan and refinance to a new one. Often, lenders have what’s called a “seasoning” requirement — a period of time you need to wait before refinancing, generally at least six months.

However, that may only apply if you’re refinancing with your current lender; you could find a lender that is willing to do the refinance sooner and skirt the six-month rule altogether. (Note that if you’re considering a cash-out refinance, the waiting period, in many cases, is firm at six months.)

For government-insured mortgages, there are different requirements. Homeowners who have an FHA loan and are looking to do an FHA streamline refinance are required to wait 210 days (seven months) from the closing date of the first mortgage, and six months from the due date of their first mortgage payment, before being able to refinance. For an FHA cash-out refinance, there is only a six-month payment requirement.

Similarly, homeowners with a VA loan considering a VA streamline refinance (called an Interest Rate Reduction Refinance Loan, or IRRRL) are required to wait either 210 days from the date of their first mortgage payment or the date the sixth mortgage payment is made, whichever is later.

For a VA cash-out refinance, the required waiting period is also at least 210 days from the closing date of the first mortgage.

Aside from these timelines, when considering how often you can refinance a mortgage, you want to make sure doing so makes financial sense. If the new interest rate isn’t significantly better than what you have right now, you may not save much after factoring in the cost of the refinance.

How Long Should You Stay in Your House After Refinancing

Maybe you were planning to stay in your home for the long haul, and you realized that you could save some money every month if you refinanced your mortgage to get a lower interest rate.

But life has a way of happening and things changed almost as soon as you finished the refinancing process. You might have received word the to-die-for job you applied for is yours for the taking if you relocate, or something else demanded that you pull up stakes.

No universal rule dictates how long you must stay in your home after refinancing. There’s not a carved-in-granite number of days, weeks or months. The answer depends on your personal circumstances and the terms of your loan.

You might be stuck for a while if your loan includes a prepayment penalty, at least if you don’t want to part with a few thousand dollars. As a practical matter, these penalties are becoming obsolete thanks to federal legislation that took effect in 2010.

The Dodd-Frank Act now imposes restrictions on them, so lenders aren’t rampantly using them anymore. But even with the legislation in place, a prepayment penalty may still apply to your loan.

A prepayment penalty is a clause that states that it will cost you money out of pocket if you pay off that refinance loan within a prescribed period of time after taking it out.

The Dodd-Frank Act confines the time to no more than three years, but you could be prohibited from selling and paying off the loan within that time, at least if you don’t want to cough up as much as 2 percent of the amount you borrowed. This drops to 1 percent by law if you make it into the third year before you sell.

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If your mortgage contract doesn’t have an owner-occupancy clause that requires you to live in your house for a certain period of time, you can sell or rent your house whenever you want to. But if you have an owner-occupancy clause that requires you to live in your house for 6-12 months or longer, you could run into trouble at closing if you try to sell your house.

If you rent out your house and you have owner-occupancy restrictions on your mortgage, your mortgage company might accuse you of mortgage fraud if they find out. This is because some mortgages such as FHA loans restrict homeowners from using these loans for investment properties.

You may also be subject to a prepayment penalty. While a prepayment penalty clause in your mortgage contract does not make it illegal to sell your house after refinancing, it could cost you a lot of money.

Finally, you need to consider whether it’s a good financial move if you sell too soon after refinancing. Refinancing is expensive. You’ll want to make sure you’re able to get enough for your house to pay off the mortgage without going underwater — owing the lender more than the house is worth.

Conclusion

The only person who can decide whether this is a good time to refinance is you. If you want a professional opinion, you are most likely to get an unbiased answer from a fee-based financial advisor. Refinancing is always a good idea for someone who wants to sell you a mortgage. Your situation, not the market, should be the largest factor in when to refinance.