How Soon Can I Refinance My Mortgage After Purchasing a Home?
How long you have to wait to refinance your mortgage loan after you buy a home depends on the type of refinance you want, whether you have a pre-payment penalty clause in your mortgage, and the rules of the mortgage lender you choose. In theory, you may be able to refinance immediately after you close your loan, although you would most likely not benefit from doing so.
Pre-payment penalty in Mortgage Loan
Before you refinance your mortgage, you will want to verify that there is no pre-payment penalty clause in your mortgage. These types of loans are no longer prevalent, but they do exist. Pre-payment penalties vary, and if you have one you will want to check with a lender to see if refinancing still makes sense for you.
Rate and Term Refinance vs. Cash-Out Refinance
There are different refinancing rules depending upon the type of refinance your are looking for. A rate and term refinance is one where the new loan amount is equal to the existing loan amount plus closing costs. A cash-out refinance is one that allows the borrower to tap their home equity and net cash after paying off the existing mortgage and closing costs.
- Rate and Term Refinance Loans: If you are looking for a rate and term refinance, you may refinance at any time. However, you may not be able to refinance with the lender who issued the loan. Most lenders will not refinance a mortgage that they issued in the past 120-180 days. These rules vary from lender to lender.
- Cash-out refinance: Homeowners who are looking to tap their home equity may have to wait longer to refinance than those looking for a rate and term refinance. The time period may vary depending upon your lender, but you may have to wait a year to do a cash-out refinance.
To find out if you are eligible to refinance your mortgage, call us today at 1-877-868-2503 to speak with one of our licensed mortgage professionals.
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