How soon can you refinance your house?

Question

I am interested in refinancing my house. I have just begun a new loan this year. Is it too soon to start the refinancing process? I am already looking for companies who have good rates. Thanks for your help!

Answer 1

I know the feeling! Here's the easy part---yes, you can refinance anytime. Here's the bad part-usually there are a ton of reasons not to do so immediately. First, does your loan contain a prepayment penalty? That means that you have to pay a percentage of the whole balance if you get a different loan before a certain "period" that they establish. Can you afford to refinance now so soon? Can you pay clsoing costs again now? Is there a bank that wants to loan money to you now after just financing a loan (yes--if you have lots of money). Also something to consider is the "break even period". That's the time is takes to "not lose any money" if you refinance. For example, the closing costs you pay (yep, you have to pay them all over again-except taxes on school/town--which you reimburse yourself and possibly a broker's fee) and the new percentage rate might have you paying more money than you would be paying before in the long run if the new percentage isn't low enough. There's a formula that you can use to determine when you will not lose money if you refinance if you know you new interest rate and closing costs.

Best things to do: 1) Pay down as much as you can to get the principal down (if possible)
2) Never take a "prepayment penalty" unless it is to give you a lower rate and you know for sure that you will not buy out the house or refinance before that period has expired
3) Make sure you have your credit at it's possible best (I know it can be hard-but do what you can anyway)

4) Be mathematically prepared to understand how you will be financially affected if you chose one type of loan over the other--make sure you understand the loan thoroughly because lenders live off of people's ignorance, really. Now, all of the predatory lenders are closing down/going out of business because people can't afford their loans and loans are going into default/houses into foreclosure

5) Never take an interest only loan---the really "low mortages out there" you get no where with your payments and then the payments go up--unless you expect to become a rich person and just haven't collected yet

6) Go to the mortgage professor www.mtgprofessor.com . He explains everything and has all sorts of calculators. I find him to be UNBIASED (as much as possible anyway) and he ellaborates on everything--including banking laws and common questions.

7) When you are sure that you want to refinance, get your quotes all within a couple of weeks so that when they "soft" check your credit, if won't affect your credit score

8) Have no regrets!!!!

9) Enjoy your house!!! (Now it's time to fix stuff ( I just watch the Money Pit to make myself feel better)

Answer 2

I work for a wholesale lender. You need to make sure that you do not have a prepay penalty on your exiting mortgage. Some Brokers get up to a 5year prepay because they can make more off the loan. so make sure you know what you are getting into. Also most companies require title seasoning. Ours is 90 days from what I hear alot of them are 6 months. You can refi anytime you want but make sure you know what you are getting into.

To be honest right now the rates are not the greatest. You can google mortgage rates and see where they are at but keep in mind that who ever you go to is not going to go with he lowest rate. They will try to up the rate to make some money on the back.

Good Luck and play it smart!!

Answer 3

Check your existing mortgage. Thanks to folks like you who desire to immediately refinance, many lenders are putting into place prepayment penalties for a couple of years after the initial mortgage was entered into.

You might find a several thousand dollar penalty facing yourself if your mortgage contains such a clause.