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How soon can you refinance a mortgage? Feature Image
Posted on April 25, 2022 6 minute read

How soon can you refinance a mortgage?


What's in this article?

Why should I refinance a mortgage?
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Conventional loans
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FHA loans 
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VA (Department of Veteran Affairs) loan
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USDA (Department of Agriculture) loan 
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Should I refinance my mortgage?
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Mortgage refinance: next steps with Homefinity 
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Considering the rising mortgage refinance rates, you might be like many homeowners who are asking: How soon can you refinance a mortgage?

Attractive mortgage rates helped more homeowners refinance their mortgage in 2020 than at any other time. And many newer homeowners are now looking toward a time when lower rates will allow them to refinance as well. 

How soon you can refinance your mortgage depends on the type of loan you have.

The most popular mortgage refinance programs are:

  • Conventional loan
  • FHA loan
  • VA loan
  • USDA loan

Today, we’ll will look at each type of the above loans and how soon you can refinance a mortgage.

Why should I refinance a mortgage?

Some of the more common reasons homeowners might refinance their mortgage include:

  • Borrowers save on interest costs, potentially thousands of dollars over the lifetime of your loan. Additionally, a lower interest rate can mean lower monthly payments freeing up money in your budget for other expenses.
  • A longer term that can mean smaller monthly payments. 
  • Borrowers can switch from an adjustable-rate to a fixed-rate mortgage. 
  • Many borrowers eliminate mortgage insurance depending on the home’s equity they’ve built up 

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Conventional loans

A conventional loan is any loan that isn’t backed by the federal government, like FHA, USDA, or VA loans.

While there aren’t any preset timeframes to refinance a mortgage with a conventional home loan, lenders would likely prohibit homeowners from refinancing their mortgage immediately after getting approved.

Depending on your lender, you may have a waiting period before you can apply for mortgage refinancing. 

You may be able to refinance sooner through a different mortgage lender, but you’ll want to check with your current lender to ensure there aren’t associated penalties.

Cash-out refinance 

In a conventional cash-out refinance, borrowers get a home loan for more money than their initial loan. This is based on the equity in their home. 

New homeowners must wait a minimum of six months after closing on the home (and have made all the payments in that time) before refinancing.

This type of refinance is a great way to leverage the money you’ve already put in your house and use it for renovations or other financial needs. 

FHA loans 

An FHA loan is a home loan insured by the Federal Housing Administration (FHA). 

FHA loans help homebuyers, particularly first-time buyers, purchase a home with a smaller down payment than what is required with other mortgage loans. 

FHA loans also have easier credit requirements compared to conventional mortgages. For example, borrowers with minimum credit scores of 500 can still apply for home loans.

Under the FHA home loans program, homeowners have several refinancing options, each with its own qualification requirements

FHA Cash-out refinance

This requires that borrowers own and live in their homes for one year before refinancing. With a cash-out refinance, homeowners can tap into the equity in their home, and turn it into a lump sum cash payment. There are no restrictions on how homeowners spend their cash-out funds.

Rate and term mortgage refinance 

For this, borrowers must have their initial loan for a year. Additionally, borrowers must have made all payments for the last six months in full and on time, with only one late payment in the previous six months.

FHA simple refinance

Borrowers must have made at least six months of on-time payments. Homeowners who have owned their home for more than six months can have a maximum of one late payment in the previous six months.

FHA streamline refinance 

A streamline refinance requires borrowers to have had their mortgage for a minimum of 210 days and have made a minimum of six monthly payments one time (and only one late in the six months previous). 

“Streamlined” loans are more straightforward than non-streamlined applications, often offering faster processing timeframes while requiring less documentation from existing customers.

VA (Department of Veteran Affairs) loan

The Department of Veterans Affairs backs home loans for eligible military service members with zero down payment. 

As a result, VA loans typically offer lower interest rates and better loan terms compared to conventional loans. 

Additionally, borrowers who get their initial mortgages through a VA loan do not have to pay mortgage insurance. 

With VA loans, homeowners have two options:

  • Cash-out refinance
  • Interest rate reduction refinancing loan (IRRRL)

Both mortgage programs require borrowers to have had their mortgage for a minimum of 210 since their first mortgage payment. Homeowners must also be up-to-date with their mortgage payments to apply for a mortgage refinance. 

USDA (Department of Agriculture) loan 

Like FHA and VA loans, USDA loans are backed by the federal government. 

The U.S. Department of Agriculture insures loans with no down payment and low-interest rates for borrowers interested in purchasing a home in rural areas.

  • Both streamlined and non-streamlined refinance requires homeowners to have made all loan payments for 180 days before they can apply for a mortgage refinancing. 
  • USDA streamlined-assist required homeowners to have made at least a year’s worth of monthly mortgage payments (on time and in full) before applying for refinancing.

Should I refinance my mortgage?

Whether refinancing your mortgage is the right choice for you is a personal decision; every family’s financial situation is different. 

No one answer applies to every homeowner 

But if you’ve had your mortgage for a while and have an opportunity to lessen the amount of debt you’re carrying, or could benefit from a lump sum cash payment for an unexpected expense, it can be worth exploring a mortgage refinance. 

By talking with a home loan specialist, like the mortgage specialists at Homefinity, you can calculate how much you might save before starting the process. 

That can be valuable information when deciding whether to refinance your mortgage. 

Mortgage refinance: next steps with Homefinity 

The trustworthy loan officers at Homefinity can help you through every step of the mortgage refinance process while guiding you through the approval process.

If you’re ready to begin the mortgage refinance process, apply for a rate quote, or start your refinance application online.

Contact the mortgage specialists at Homefinity today.

If you have questions about whether refinancing your mortgage is the right choice for your specific situation, we’ll guide you through every step!

Some references sourced within this article have not been prepared by Fairway and are distributed for educational purposes only. The information is not guaranteed to be accurate and may not entirely represent the opinions of Fairway.

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