The number of times you can refinance a mortgage is unlimited, but various factors should be considered before doing so.
Refinancing your home can be a smart financial move, allowing you to potentially save money on your mortgage payments or access cash for other purposes. But how often can you refinance your home?
While there is no set limit to how often you can refinance a mortgage, several factors should be considered before deciding to do so. It's crucial to understand the potential benefits and drawbacks of refinancing multiple times, as well as the impact it can have on your credit and overall financial situation.
How Often Can You Refinance Your Home?
Homeowners with traditional home loans can refinance as often as they like, so long as they meet lenders’ requirements.
“There's no legal limit on refinancing frequency for conventional loans,” says Reed Letson, owner of Elevation Mortgage.
Other loan types, however, require you to meet certain qualifications before allowing another refinancing on the same property.
“For Veterans Affairs and Federal Housing Administration streamline refinances, there is a 210-day period where you can’t refinance and you must make six on-time payments,” Letson says.
If you’re seeking a cash-out refinance on a conventional home loan, you must have more than 20% equity in your home, and you’re limited to an 80% loan-to-value (LTV) ratio, or the percentage of the loan compared to your home’s value.
“So if you have 30% equity, you can only receive up to 10% in cash-out,” Letson explains.
For a cash-out refinance on an FHA loan, you must have lived in the residence for at least 12 months and made at least six on-time payments.
| Loan Type | How often can you refinance? |
| Conventional loan | No limit as long as you meet lenders’ qualifications |
| VA or FHA Streamline Refinance | 210-day waiting period from the last refinance, and must make six on-time payments |
| Cash-out refinance on a conventional loan | No limit, but you must have at least 20% equity in your home and you’re limited to an 80% LTV |
| FHA Cash-out Refinance | Own your home for 12 months and make six on-time payments from the last refinance |
Reasons to Refinance Multiple Times
For multiple reasons someone might want to refinance their home mortgage more than once. Here are just a few:
Interest Rates Keep Dropping
Even a small difference in interest rates can save you thousands over the life of your home loan. If it’s a big difference, that’s even better. If you purchased a home with higher interest rates, you should consider refinancing.
You Want to Lower Your Payment
Maybe you started with a 15-year term, but the payments are taking up too much of your budget. Maybe you’ve been paying on a 30-year mortgage, but your financial situation has changed, and you want to start fresh with a new 30-year mortgage. Regardless of the reason, refinancing into a longer-term mortgage can lower your payments and give your budget some breathing room.
You Want a Different Type of Loan
People sometimes refinance because they want to change their type of home loan. For example, someone taking out an FHA loan may switch to a conventional loan so they don’t have to pay for mortgage insurance, as FHAs require. Once you have 20% equity in the home, you can switch the FHA to a conventional loan and eliminate the insurance requirement, so long as you keep that 20% equity after closing. This results in a lower monthly payment.
You Want to Cash Out Equity
A cash-out refinance allows you to walk away with some cash after closing. You can use the cash for any purpose, including renovating homes, paying for college expenses or consolidating debt. This option works best if you know exactly how much you need to borrow. If you need some flexibility, a home equity line of credit (HELOC) may be a better fit.
What to Consider Before Refinancing Again
There are multiple things to consider before doing another refinancing on your home mortgage.
“The most important thing to watch out for when refinancing are excessive closing costs that eat up any potential savings,” says Letson. Just like with a mortgage, refinancing comes with closing costs that the homeowner must pay before the deal becomes official. This short-term expense might be worth it in the long run, but others might want to maintain their safety net.
For people refinancing an FHA loan, you’ll need to pay an upfront Mortgage Insurance Premium (MIP) rate equal to 1.75% of the base loan amount.
“For VA loans, remember to look at your VA Funding fee, as this can range from 0.5% for Interest Rate Reduction Refinance Loans to 3.3% for a cash-out,” Letson says.
RELATED: How long does it take to refinance?
Should You Refinance Multiple Times?
Refinancing could be right for you, even if you’ve refinanced relatively recently. Remember that you must pay substantial closing costs each time you refinance. The refinance needs to be worthwhile, even with the extra costs.
A refinance should improve your financial situation in some way. It could help you:
- Lower your interest payments
- Lower your monthly payments and improve your financial situation
- Pay your loan quicker
- Pay off high-interest credit card debt with equity built in your house
- Finance home renovations without using high-interest credit cards or loans.
- Pay for college without taking out student loans.
Why You Should Trust Us
Benzinga has offered investment and mortgage advice to more than one million people. Our experts include financial professionals and homeowners, such as Anthony O’Reilly, the writer of this piece. Anthony is a former journalist who has won awards for his coverage of the economy of New York City. He has navigated tricky real estate markets in New York, Northern Virginia and North Carolina.
For this story, we worked with Reed Letson, the owner of Elevation Mortgage, a mortgage lender in Colorado and Florida.
Frequently Asked Questions
How soon after refinancing can you do it again?
There’s technically no time limit for a second or third refinancing for a conventional loan, so long as you meet the lender’s requirements. That said, some banks or credit unions might be wary of allowing successive refinancings in a short time period.
Is there a downside to refinancing multiple times?
Refinancing multiple times can lead to added closing costs and fees, negatively impact credit scores and result in paying more interest by extending the loan term.
Do you need 20% equity to refinance?
Depending on the type of refinancing you seek and whether you’re trying to tap into your home equity, you might need 20% equity to refinance. If you want to change your interest rate or the terms of your home loan, you may not need that 20% equity.
Sources
- Reed Letson, owner of Elevation Mortgage
About Anthony O'Reilly
Anthony O’Reilly is an updates editor for Benzinga. He’s won numerous journalism awards for his coverage of the New York City economy and Long Island school district budgets.