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Dec. 16, 2021, 6:42 p.m. EST

How often is too often to refinance your mortgage?

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By Alisa Wolfson

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With mortgage refi rates still near record lows (some 30-year rates are around 3% and some 15-year rates around 2.5%, as you can see here) , you might be wondering just how often you can refinance. The answer, says Holden Lewis, home and mortgage expert at NerdWallet, is often that you can refinance as often as you wish. “The main exception is cash-out refinances. In most cases, you have to have your mortgage for six months before you can refinance it for more than you owe,” says Lewis.

With today’s low rates , more consumers are doing back-to-back refis. Indeed, data from Freddie Mac shows that there was an increase in repeat refinances last year, which includes loans that were refinanced two or more times in a 12-month period: “In 2020, 10.1% of refinances were repeat refinances, up from 7.8% in 2019,” the mortgage giant writes. 

Is a repeat refinance right for me?

With rates near historic lows and home values at record highs, many loans a year old or older could be good candidates for refinancing, says Jonathan Lee, senior director of mortgage sales for Zillow Home Loans. “High home values mean the difference between your mortgage rate and a refinance rate can be as low as .25% in some cases and still make financial sense,” says Lee. A high home value could mean you can get rid of private mortgage insurance, assuming you’ve reached 20% equity in your home. You might also look into shortening your loan term, for example from 30 years to 15 years, which can save your thousands of dollars over the life of the loan. But do the math, because a refinance doesn’t always make sense, and the general rule is that you’ll want to save about half to three-fourths of a percentage point to make it worth it, says Lewis. And look too at your break-even point, so you can ensure that you’ll recoup the costs of the refinance before you sell the home, says LendingTree’s senior staff writer Denny Ceizyk: “The break-even is calculated by dividing the total loan costs by the amount of savings. If costs are $5,000 for a refinance that will save $200 per month, then the refinance break-even point is 25 months. If the homeowner plans to keep their home for at least 25 months, they’ll recoup their costs and the refinance makes sense,” says Ceizyk. 

Are there restrictions on a repeat refinance?

In addition to the fact that you usually have to wait to do another refinance for about six months if you did a cash-out refinance, there may be other rules. Ceizyk says it’s important to note that with some government-backed FHA, VA or USDA loans, there may be a waiting period required between refinances. Find the best mortgage refinance rates in your area here.

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