Key Takeaways
- You can refinance again, but most lenders require at least a six to seven month waiting period.
- Refinancing too soon may cost more than it saves once you factor in closing costs and your break-even point.
- The decision should be based on your long-term goals, current equity, and how long you plan to stay in the home.
Yes, refinancing again is possible, but keep in mind that most lenders have waiting periods.
A mortgage refinance creates a new loan to replace your existing one. This can reset your term, change your payment, and adjust other details of the loan.
While some people refinance and keep their new loan for many years, circumstances may arise that make refinancing again (soon after) worth considering.
Why homeowners consider back-to-back refinances
Refinancing involves another mortgage application and undergoing the underwriting process again. So back-to-back refinances might seem uncommon, but they happen more often than people think.
One reason for this might be a sudden sharp drop in mortgage rates.
Rates usually change gradually, but when they drop enough, the savings can be substantial. For example, a $400,000 loan at 6.6 percent versus 4.2 percent could lower your monthly payment by hundreds of dollars. That extra money can go toward savings, home improvements, or simply give you more breathing room in your budget.
Another reason for a back-to-back refinance can be a change in financial circumstances. A divorce, job loss, or other life event can push someone to refinance to lower their payment or remove a name from the mortgage loan.
A lower rate also means less interest paid over the life of the loan. In which case, more of each payment can go toward the principal, helping pay off the mortgage faster.
Loan structure is also a key factor in back-to-back refinances. Someone may refinance out of an adjustable mortgage into a fixed-rate loan for stability. Others might move from a 30-year loan to a 15-year loan to save on interest. Or perhaps refinance to remove private mortgage insurance (PMI) once they have enough equity.
Check your refinance eligibility. Start hereHow soon can you refinance again?
There are no strict rules on how long you have to wait before refinancing again, but many lenders require a “seasoning period.” This is typically around six to seven months, but the exact timing depends on the type of loan.
Mortgage refinance “seasoning " timelines
- Conventional loan: A conventional loan is not backed by the government and follows guidelines set by Fannie Mae and Freddie Mac. Most lenders require a six-month waiting period before refinancing.
- FHA loan: An FHA loan is insured by the Federal Housing Administration. The typical waiting period is seven months (with at least six on-time payments)
- VA loan: A VA loan is backed by the Department of Veterans Affairs and available to eligible service members, veterans, and surviving spouses. The waiting period is seven months (with at least six on-time payments)
- Cash-out refinance: A cash-out refinance allows you to tap into your home equity. Lenders usually require a waiting period of six months for a cash-out refinance.
The trade-offs of refinancing too soon
Even if you’re eligible for another refinance, it might be too soon once you factor in what you’ll spend on closing costs.
It’s important to consider the break-even point from your first refinance. Let’s say you spent $4,000 in closing costs on your first refinance to lower your mortgage payment by $150 a month. In this case, you would need to stay in the home for about 27 to recoup that expense.
Therefore, if you were to refinance a second time and pay close to the same amount in closing costs to reduce your payment by another $150, you would need to stay an additional 27 months to break even on the second refinance.
This illustrates why timing is critical. If you haven’t reached the break-even point from your first refinance, or if you don’t plan to stay in your home long enough to cover both sets of expenses, refinancing again could cost more than it saves.
A refi should be about lowering payments, improving loan terms, or accessing equity, yet jumping into a second one too soon can defeat those goals.
Here’s a checklist to decide whether refinancing again makes sense for you:
- Check your break-even point. Calculate how long it’ll take to recoup the closing costs from your first refinance.
- Estimate costs for the second refinance. Include closing costs, fees, and any other upfront expenses.
- Compare monthly savings. How much will your payment decrease? Is it worth the cost and effort of refinancing again?
- Consider how long you plan to stay. If you plan to move in the next few years, refinancing again might not save you money.
- Evaluate your loan term. Are you resetting to another 30-year mortgage? How does this impact your total interest paid and time to build equity?
- Check equity requirements. Do you have enough equity for the type of refinance you want, especially if it’s a cash-out refinance?
- Market conditions and interest rates. Are current rates low enough to make refinancing worthwhile, or could you wait for a better opportunity?
The bottom line
Even though homeowners have the option to refinance again within six to seven months, it’s not the right decision for everyone. You need to consider several factors, including timing, out-of-pocket costs, and your long-term goals.
Think about how long you plan to live in the home and whether refinancing will help you financially. The goal is to create a mortgage that’s more affordable with terms that work in your favor.
For a broader look at timelines across all loan programs, see our guide on How Soon Can You Refinance a Mortgage?
