With mortgage rates once again at stone-bottom lows, you may be wondering if at present is a good time to refinance.

The brusque answer: Yes, it probably is. Only what if you've refinanced before? How oft can you refinance your domicile—and is there a downside to refinancing multiple times? The long answer depends on a few factors.

How Many Times Tin can You Refinance Your Home?

The process of refinancing a mortgage involves taking out a new loan and using the funds to pay off the existing loan. You tin refinance with the aforementioned lender or work with a different one.

Technically, at that place's no limit to how many times you tin refinance your mortgage. All the same, there may be a limit to how often y'all can do information technology.

Known as a "seasoning requirement," lenders may institute a waiting period before borrowers are approved for refinancing. Typically, you'll need to wait six to 12 months between getting a mortgage and seeking to refinance. If y'all're refinancing to eliminate private mortgage insurance, yous may have to wait ii years. Even so, this requirement depends on the lender, and there may be exceptions.

Greenbacks-out refinancing, in particular, often requires borrowers to await at least 6 months from the last fourth dimension they refinanced before they can be approved again, even if they're working with a different lender.

Government-backed loans as well usually have waiting periods. An FHA Streamline refinance, for case, requires that at least six full months have passed since the first payment due engagement on the mortgage, and at least 210 days have passed from the mortgage closing engagement.

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iv Smart Reasons to Refinance

Whether you're considering refinancing for the start or fifth time, in that location are definitely good and bad reasons to go through with information technology. Beneath are some of the ways you could benefit from refinancing.

1. Go a Lower Interest Rate

If you took out your mortgage a while agone, when interest rates were college or your credit score wasn't in not bad shape, y'all could stand to save quite a fleck of coin past refinancing. For example, a thirty-twelvemonth mortgage of $100,000 with a 6% interest charge per unit would toll y'all $115,838 in interest over the life of the loan. If that rate dropped to 4%, you lot'd save $43,968 over 30 years.

two. Reduce Monthly Payments

Maybe you can't authorize for a lower interest charge per unit, but yous still demand to reduce your monthly payments to open up more cash flow. In this case, you tin refinance to a longer term, extending the amount of time you have to pay off the loan and decreasing the corporeality you're required to pay each month. Keep in listen that with this option, yous will end up spending more in interest over the life of your loan, considering you'll spend more fourth dimension paying it off.

3. Pay Off the Loan Faster

On the other hand, maybe you lot want to pay off your loan even faster. By refinancing to a shorter repayment period (and maybe a lower interest rate, too), your monthly payments will increment—but you'll get rid of your debt sooner and save money in the process. Take our earlier example of a $100,000 xxx-year mortgage with a half dozen% involvement charge per unit. If you cut the repayment menses to 20 years, the monthly payment would increase from $600 to $716 (in principal and involvement), but yous'd shave off 10 years and $43,895 in interest from the loan.

4. Turn Equity into Cash

If your dwelling'southward value has increased since you bought it or last refinanced, yous can refinance once again to greenbacks out some of the equity. This involves refinancing to a loan in the amount of your existing mortgage, plus the amount you want to borrow against your equity. Generally, you desire to maintain at least 20% equity later on refinancing.

Common reasons for greenbacks-out refinancing include paying off college-interest debt (like credit card debt), financing home improvements or starting a business. It's important to sympathize that your loan will increase in size and you lot'll also have to pay closing costs and other fees, which means your monthly mortgage payments and total interest paid also will increase with this pick.

3 Bad Reasons to Refinance

Even though refinancing can save yous a lot of money, it besides can cost y'all if it'south non washed for the correct reasons. In other words, simply because y'all tin refinance once more doesn't mean you should. Here are a few situations in which it probably doesn't make sense to refinance.

1. Interest Rates Dropped Slightly

Even though lowering your mortgage rate tin help you salvage quite a bit of coin over time, the difference in rates needs to be large plenty to warrant paying closing costs on the new loan. If rates have only fallen fractions of a percentage bespeak, it's probably not enough to make refinancing worth information technology.

2. Your Credit Score Increased a Few Points

Refinancing after your credit score improves is another way to score a lower rate. Still, the exact score doesn't affair much; it's the credit tier you fall in that really matters.

For example, borrowers with a score that falls between 800 and 850 are considered to have exceptional credit, though a lender may consider anything between 750 to 850 equally top-tier. And so if your credit score bumps up from 780 to 800, information technology'south something worth celebrating—just you lot probable won't qualify for a lower charge per unit based on that score lone. On the other hand, going from a "fair" score of 650 to an infrequent 800 could definitely aid you relieve money.

3. You Want to Brand a Major Purchase

Cashing out disinterestedness to pay off high-interest debt or fund a home comeback project that volition ultimately increase your home's value is a smart move. However, cash-out refinancing is not a keen idea for all circumstances.

If you plan to use the money for a large vacation, new car or other non-essential, large-ticket buy, it'southward probably not a skillful idea. You'll exist paying interest on the loan for years to come, making that purchase much more expensive in the long run. Plus, if you lot run across fiscal problem down the road and your mortgage payments are too high to handle, you lot risk losing your home. That's not worth it.

Computing Your Cost to Refinance Multiple Times

The decision to refinance really comes down to crunching the numbers. You can refinance as frequently every bit you lot like, as long as it makes financial sense (and you lot meet the lender's seasoning requirement).

If your goal of refinancing is to save money, you'll desire to consider the closing costs in comparison to your potential savings. Generally, these fees will be about 2% to five% of the loan principal.

Another catch to keep in heed when considering refinancing is prepayment or early on payoff penalties on your mortgage. Some lenders discourage borrowers from paying off their mortgages right abroad, every bit that prevents them from earning much profit on your loan. If your lender charges an early on payment penalty, you'll need to factor that cost into the overall savings of refinancing.

Alternatives to Refinancing Your Home Once more

If you need extra cash but refinancing doesn't make sense right at present, you nonetheless have options.

I way to tap your home's equity without a greenbacks-out refinance is by taking out a home equity loan or home disinterestedness line of credit (HELOC). These options let you lot borrow confronting the disinterestedness in your home and are fairly depression-involvement. However, information technology's important to make your payments on time, otherwise you could risk your home, which serves equally collateral for these types of loans.

Another borrowing option is a personal loan. There are both secured and unsecured personal loans, both of which come with fairly competitive rates every bit compared to credit cards as long as your credit is in decent shape. An unsecured loan may come with a slightly higher interest charge per unit, but the benefit is that you don't need to back information technology with any collateral. This tin can be a good way to infringe coin for just about any reason without risking your home or other assets.