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How Soon Can You Refinance a Mortgage?

December 23, 2022

Are you wondering how soon you can refinance your mortgage? Refinancing a mortgage can be intimidating, especially if it's your first time. However, if you’re strategic about refinancing your mortgage, you could save thousands in mortgage payments.

Fortunately, the process doesn't have to be complicated. With the right knowledge and research into refinancing options available to you, it's quite possible that you could start streamlining payments and saving on interest sooner than you think. 

In this comprehensive guide, we’ll explore what goes into refinancing a mortgage so that when it’s time for you to move forward with adjusting to your current situation, you'll feel confident about taking action. 

It’s time to stop wondering, “how soon can you refinance a mortgage” and empower yourself by learning more about what steps will make refinancing possible for you.

Mortgage Refinancing 101

Before diving into the specifics of the refinancing process, let’s first define what it is. Mortgage refinancing is the process of getting a new mortgage loan to pay off an existing mortgage. 

When you refinance your mortgage, you can usually get a lower interest rate and better terms, which means you'll make smaller mortgage payments each month. This could also save you money in the long run if the total cost of the mortgage loan is less than what you've been paying. 

Overall, people typically refinance a mortgage loan when they want to:

  • Lower their monthly mortgage payment
  • Reduce the amount they owe on their mortgage
  • Cash-out some equity from their home

Is now a good time to refinance? As of March 2023, the current average 30-year fixed refinance interest rate is 7.12%. While this is slightly down from the beginning of the year, it’s over double the refinance interest rate of December 2020, which was just over 3.1%.

However, what really matters are the current mortgage refinance rates versus your original mortgage loan interest rates. That’s what you should be assessing when looking into refinancing.

Reasons to Refinance a Mortgage

All in all, refinancing a mortgage can be a great way to save money over time. However, there are several other reasons one might want to consider refinancing, such as:

  • Getting a lower interest rate
  • Switching from an adjustable-rate mortgage to a fixed-rate mortgage
  • Adding additional features (such as home equity lines of credit)
  • Accumulating more equity and therefore qualify for a better rate
  • Shorter repayment terms

Knowing your reasons for refinancing will determine what kind of loan is right for you in the end.

How Soon Can You Refinance a Mortgage?

If you’re looking at the benefits above and think they sound great, then we suggest you look into the following:

  • Current mortgage refinance rates
  • A refinance mortgage calculator
  • The cost of refinancing a mortgage

If, after looking into your financial situation, you find that it’s totally worth it, your question is likely: How soon can you refinance a mortgage? The answer depends on the type of mortgage loan you have.

Conventional Loans

Refinancing a conventional loan is relatively easy and doesn't take long. In most cases, you can refinance as soon as you'd like. You might have to wait six months if you refinance with the same lender, but switching up your lender won't make much difference. 

The only exception would be cash-out refinances. In this case, you must own the home for six months. This wouldn’t be the case if you inherited or received the home as part of a divorce.

Do you have a  jumbo loan? Like a conventional loan, you can refinance a jumbo loan whenever you want.

FHA Loans

The FHA Home Loan Explained • 719 Lending Mortgage Brokers
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The Federal Housing Administration offers several refinance options, including the following:

  • Cash-out refinances allow borrowers to borrow more than they owe and take the difference in cash.
  • Rate and term refinances are for those who want to lower their interest rates or change their loan structure.
  • Simple refinances are for those who don't need or want cash out but still want a better deal.

Do your homework on the different refinance scenarios to make the best decision for your needs. Here is how soon you can refinance a mortgage if it was originally an FHA loan:

  • Cash-out refinance: You must own the home outright or have had your mortgage for at least six months. You must also have made all payments on time in the last 12 months.
  • Rate and term & simple refinance: It’s the same for both. You must wait at least seven months and have no more than one late payment in the last six months (you can have up to one late payment in the six months before that, though).

Note that there are also FHA streamline refinance loans. As the name suggests, it offers a streamlined way to refinance your mortgage loan. There’s less paperwork, and the process is much faster overall.

To qualify for an FHA streamline refinance, you are only eligible after you’ve had the mortgage for at least 210 days. You must have made at least six monthly payments on time and cannot have had a late payment in the past six months.

VA Loans

To refinance a VA loan, the Department of Veterans Affairs requires that you have made six payments (or have waited at least 210 days), depending on which has passed first. It’s important to note that this is the rule whether you’re looking for a cash-out refinance or an IRRRL (Interest Rate Reduction Refinance Loan).

Is Refinancing Worth It?

Refinancing your mortgage can be a smart move in some situations, but there are two sides to this coin. On the positive side, refinancing can help you with the following benefits:

  • Generally, refinancing helps you save money each month by securing a lower interest rate or choosing a more favorable repayment plan.
  • This could result in substantial savings that can add up over time. As mentioned in the beginning, most people save thousands of dollars annually by refinancing a mortgage loan.
  • With more savings, you have more money for other investments or goals.

On the other hand, refinancing comes at an initial cost. How much does it cost to refinance a mortgage? According to ClosingCorp, the average closing costs were just over $2,000 in 2021 (excluding taxes). Generally speaking, closing costs are around 2% to 5% of your principal loan amount.

Another reason to think twice about refinancing a mortgage loan? It incurs another loan with associated drawbacks, such as stricter terms and conditions that may not be beneficial in the long run. 

Ultimately, refinancing your mortgage is worth it if the potential savings outweigh any risks or additional costs associated with this decision.

Build Credit With Cheese

Did you know that many mortgage loan types require you to have a minimum credit score of 620 to refinance your loan? This means that, before you even consider how soon you can refinance your mortgage, it’s worth ensuring your credit score is solid.

If you need to boost your score, do so with Cheese. Our easy-to-use credit builder app gives you access to credit builder loans, making it effortless for you to achieve an improved credit rating. 

With every payment you make reported to all the major credit bureaus, your score will get a steady boost over time. Best of all, at the end of the loan, you get your payments back in full (minus interest).

Get started now and get rewarded for taking control of your finances.

Cheese Credit Builder

Cheese helps you build credit and save money on autopilot.

- No Credit Check or Admin Fees
- Get a Custom Credit Builder Loan
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