How Soon Can You Refinance Your House?

If you’ve recently bought a home and your interest rate is higher than you would like it to be, you’re probably wondering, “How soon can you refinance your house?”

As with most things in real estate, that depends on several factors. The biggest variable at play is what type of mortgage you have, as some loans have what’s known as seasoning requirements. Here’s everything you need to know. 

How soon can you refinance your house?

Occasionally, lenders will allow you to refinance immediately. However, most lenders enforce a six- to 12-month waiting period before you can refinance, which is known as a seasoning period. Here’s a breakdown by mortgage type.

Conventional mortgage 

If you have a conventional loan backed by Fannie Mae or Freddie Mac, you may not have a formal waiting period. However, lenders may still want to see that you’ve made at least six consecutive months of payments on time.

If you didn’t make your first payment for 60 or 90 days, this means you may have to wait up to eight months after closing.

If you’re exploring cash-out refinance options, you’ll likely have to wait at least six months from your original closing date. You must also have equity in the home. Generally, cash-out loans don’t allow you to finance more than 80% of the home’s value, including the money you’re pulling out. 

FHA

There are a few different options for FHA loans. FHA streamline refinance loans require you to wait at least 210 days from your original closing date. You’ll also need to make six on-time payments. If you’re cashing out, the FHA requires you to own the home for at least 12 months and live there as your primary residence.

VA

VA loans also follow the 210-day rule for Interest Rate Reduction Refinance Loans (IRRRLs). If you’re doing a cash-out loan, you’ll need to have owned the home for at least six months.

USDA

The USDA offers streamlined refinance loans, which you’ll be eligible for after 12 months of on-time payments. You must also meet specific occupancy and income-eligibility guidelines. 

Seasoning requirements explained

The term “seasoning” is used in several different mortgage scenarios. In the context of refinancing, seasoning refers to the period before you’re allowed to refinance. Most lenders require you to wait six to 12 months before you can refinance to another loan. This is known as the seasoning period. 

If you’re refinancing to eliminate private mortgage insurance (PMI), the seasoning requirement is typically 24 months. That means you would need at least 20% equity in the home, and you would also have to wait two years. Make sure to ask your lender about their seasoning requirements before moving ahead with refinancing.

How soon can you refinance after a previous refinance?

Sometimes, lenders will allow borrowers to refinance as soon as they want. However, it’s more common for lenders to enforce a seasoning period of six to 12 months. 

Even if your lender allows you to refinance quickly, it may not be the best idea. After all, refinancing should be purposeful, meaning it should lower your interest rate, allow you to drop PMI, or otherwise save you money. Consider your motivation for refinancing and talk to your lender about whether it’s worth it. 

Baseline requirements for refinancing

Instead of simply asking, “How soon can you refinance your house?” you should consider whether you’re ready to refinance. Here are some general requirements you should meet before refinancing to ensure that the process is worthwhile.

Good credit score

If you didn’t have the best credit score when you took out your mortgage, refinancing may be a way to get a more competitive interest rate. However, if your score hasn’t changed much since then, you may just be wasting your time.

If you’re looking to improve your credit score, Kikoff can help. The dynamic credit-building platform helps consumers strengthen their credit by tracking and simplifying positive activity, such as on-time payments and rent reporting.

A change in interest rates

Look at how interest rates have changed since you bought the home. Even if your credit score has gone up, you’ll also want interest rates to have improved as well. Knocking 0.25% off your interest rate probably won’t make much difference. However, if you can reduce your interest rate by 0.75% or more, it could translate to major savings. 

Appreciation of the home 

If the home has appreciated since you purchased it, you may meet the 20% equity rule and be eligible to drop PMI. In that scenario, you’ll need to check your lender’s seasoning requirements. If it hasn’t been at least 24 months since you purchased the home, you may not be able to drop PMI yet.

Prepare for refinancing with a good credit score

The biggest factor at play when refinancing a home is your credit score. A higher score means better rates and long-term savings.

If your score isn’t where you want it to be, team up with Kikoff. Kikoff offers a variety of services and tools to put you in control of your financial future, including:

• Verified rent reporting
• A secured credit card
• Invite-only credit-builder loans
• Free dispute tools
• Free debt negotiation

Want to learn more? Build credit responsibly with Kikoff’s plans.