After I Purchase My Home, How Soon Can I Refinance

When interest rates change, homeowners ask one question. How soon can I refinance after I purchase my home? This really depends on several different things. The type of refinancing you are wanting to do and  whether there is any kind of a pre-payment penalty that will be assessed as well the specific policies of the new lender you choose will all need to be taken into consideration.

Before pursuing any type of refinancing, check your existing loan terms. Many mortgages have pre-payment penalties. This is in place many times to protect lenders. If borrowers pay off their loans too soon, the lender will lose money because the interest will not accrue. If your existing mortgage has a pre-payment penalty it will mean that you will have to pay a preset amount to the lender so that you can refinance.

Usually there are time limits set on the penalty which means that it expires at a certain time such as a year. If there is such a policy in place on your present mortgage it will be wise to wait until the pre-payment penalty time frame has passed before pursuing any type of refinancing options. However, it is possible to refinance, but these fees will have to be paid before doing so. Talk with your financial advisor to see if it is a viable option before proceeding into another mortgage.

It is possible to refinance at any time after the owner closes on their initial mortgage. It is the lender who stands to lose money if the loan is refinanced in less than six months because of the way the interest and market work. Generally, even though it is possible, a lender will not usually help you refinance until at least six months has passed.  But because of the way closing actually operates it may take somewhere between thirty and sixty days to finalize. So the wait to refinance may be only sixty to one hundred twenty in actuality. That is if you wish to go with the same lender. Using another financial institution is always an option as well.

Those who use cash-out refinancing will have to wait much longer to refinance their mortgage. The market is constantly changing and presently it is possible to purchase a home below market values. Owners like to use a cash-out refinance which puts that extra amount back into their pockets for immediate use. But this option is not realistically available if you just purchased your home. A lender will want to see that you have been consistent with payments before refinancing. There are some who will approve the cash-out mortgage on property that has been purchased twelve months or less, but the interest rates are so high it is not usually worth the risk.