Interest rates are going up right now so a lot of people are looking to get a mortgage refinance. They realize that if they get a mortgage loan now, it’s likely to be at a lower rate than if they wait 6 months or a year.
The question is, when can you refinance? Are they specific requirements, or can you just do it anytime you want?
The short answer is it depends on what type of loan you have.
How soon can you get a mortgage refinance on a Conventional Loan?
Most people carry a conventional mortgage on their home. This type of loan is one that meets the standards set by Freddie Mac and Fannie Mae. If you don’t have an FHS, USDA, or a VA loan, you probably have a conventional mortgage.
The interesting thing with this type of loan is you can refinance any time you want. Your lender may want to wait at lease six months, but you could always refinance with another lender.
Why is there no waiting period and why don’t a lot of people do this. Because as you would expect, the interest rates usually don’t dramatically change in a short period of time. If you refinance just a few months after buying the home, you are probably actually losing money because you’re paying the upfront ffees to close on the new loan.
There is an exception to the “no time requirement” rule. If you want to do a cash-out refinance, you need to own the home for at least six months first. The only time this doesn’t apply is if you inherited the home or were awarded the property in an event like divorce or a separation of a domestic partnership.
When can you refinance an FHA Loan?
FHA Loans are quite common, so it is likely you fall in this camp. The interesting thing about this loan program is the refi options have different rules.
For example, let’s say you want to cash out. You have to live in the home as your primary residence for at least 12 months to do this.
If you do a simple refinance, you have to wait at least 7 months, or six monthly payments.
For an FHA streamline, you need to have the mortgage for at least 210 days and paid at least 6 montly payments.
When can you refinance other home loans?
While less common, a lot of people do carry these types of loans so we wanted to include them.
- A VA Loan requires you to wait at least 210 days or after 6 payments, whichever is the longer of the two.
- For USDA loans, guaranteed loans require a mortgage of at least 12 months but direct loans don’t have a refinancing waiting period.
- Jumbo loans can be refinanced any time you want, just like a conventional loan.
When should you get a mortgage refinance?
The short answer once again is that it depends on your situation. If you plan on living in your home for a while, it never hurts to get a quote from a mortgage broker. In fact, we always encourage it.
Why? Because you have no idea how much money you can save every month until you work with a broker to run the numbers. For example, let’s say your current mortgage was originally for $350,000 with an interest rate of 4%. In that case, your monthly payment is probably about $1,954. If you can refinance and get it down to a 3.7% interest rate, your monthly payment is now $1,894. Who doesn’t want to save $1,200 over the course of the next year and over $30,000 over the lifetime of the loan?
To learn more about your mortgage refinance options, send me a message or give me a call at (775) 688-9100. I’ll talk to you soon!