How Many Times Can You Refinance a Mortgage

You are reviewing the latest mortgage rates. Chances are they are lower than the rate you are currently paying. Your most recent refinance was not that long ago, but you believe you might be able to save some significant money by refinancing. How many times can you refinance a mortgage? In most cases, you can do this as often as you want. If you have been consistent and timely with mortgage payments, your lender will generally be happy to assist you in a refinance, because it will recoup money in the associated fees. However, there are a number of factors to consider.

Does your existing mortgage contain a penalty for prepayment? Review your documents before proceeding with a refinance. If the prepayment penalty is substantial, it could cut into any long-term cost savings you may achieve. Some lenders require that you wait at least one year after the purchase of your home before you embark upon a refinance. Will the lower rate offer long-term stability? Many people have been negatively affected by the volatility of adjustable rate mortgages (ARMs).

If you decide to refinance, conduct thorough research into all aspects of a new mortgage, especially the closing costs. Although a mortgage rate may seem attractive, some lending institutions may charge artificially high prices in the areas of title charges, loan origination costs and appraisals. Applicable state and local taxes should also be examined. When you receive an estimate of the closing fees, conduct a break-even analysis by dividing the closing costs against the projected monthly savings. Once you have calculated how long it will take you to break even on a refinance, consider how long you plan to stay in your home. If you expect to reside in it indefinitely, a refinance may make sense. However, if you intend to change homes before you break even on the refinance costs, you may not want to pursue the activity. By doing homework before you refinance a mortgage, you will save thousands of dollars in the long run.