How Soon Can You Refinance a Mortgage in 2024?

If you’ve taken out a home loan with unattractive rates and stumbled upon better ones in the meantime, you’re probably wondering—how soon can you refinance a mortgage? The good news is that there are no set rules when it comes to refinancing your home loan, as it all depends on your specific situation and the lender you choose. However, there are some things you can keep in mind to make the process go as smoothly as possible, and we’re here to help you refinance your loan as quickly and easily as possible!

What Does It Mean to Refinance a Mortgage?

To refinance a mortgage essentially means taking out a new loan to pay off your old one. Although this can be a great way to lower your mortgage payment and interest rate, change your terms, or consolidate your debt, refinancing does come with some costs and risks.

 How Soon Can You Refinance a Mortgage?

There is no one-size-fits-all answer to this question—some lenders may allow you to refinance as soon as six months after taking out your original mortgage, while others may require a longer waiting period. It all depends on the terms of your new loan and how your credit score has changed since you took out your original mortgage.

1. Conventional Loans

A conventional loan is a non-government-backed mortgage that typically has a lower interest rate and requires less paperwork than other types of mortgages, such as FHA loans. If you have a conventional mortgage, you can start the refinancing process as soon as you want, but the minimum time wait is six months if you want to refinance a new mortgage from the same lender. Plus, to qualify for a refinanced loan, most lenders require a credit score of 620 or higher, regular monthly mortgage payments in the past, and having at least 20% equity in your home.

2. FHA Loan

FHA loans are mortgages insured by the Federal Housing Administration (FHA). These loans are designed for low- to moderate-income borrowers unable to make a large down payment. FHA loans allow for a lower credit score and down payment than a conventional mortgage, but there are some trade-offs—you can refinance such a mortgage any time, but you have to wait for 12 months if you want to take out a new FHA loan. The refinance process usually takes 30 to 45 days, so start planning ahead if you want to refinance. Also, if you have an FHA loan, be sure to ask your lender about the “Streamline Refinance” program.

3. VA Loans

A VA loan is a government loan guaranteed by the United States Department of Veterans Affairs (VA) and designed to offer long-term stability and low-interest rates to military veterans and their families. Rules for refinancing VA loans vary depending on the type of refinancing. In order to be eligible to refinance a VA home mortgage, you must have a credit score of at least 620. However, if you can put down at least 25% of the purchase price, your credit score can be as low as 580.

If you have a VA interest rate reduction refinance loan (IRRL), you can refinance any time, and if you have a VA cash-out refinance, you must wait at least six months from the date of your last closing before applying for another one. However, there are exceptions to the six-month rule—if you can prove to your lender that the cash-back refinance is for a legitimate purpose, such as paying for home improvements or debt consolidation, you can refinance sooner. In those cases, your lender may require additional loan documents to refinance a mortgage for approving your loan.

4. USDA Loans

USDA loan is a rural housing loan program offered by the United States Department of Agriculture that helps low- to moderate-income homebuyers purchase homes in rural areas with no down payment. There are two types of USDA refinances: the streamline refinance and the cash-out refinance. The USDA refinance is for borrowers who have an existing USDA loan and want to lower their interest rate, and the cash-out refinance is for borrowers who want to take out more money than they currently owe on their mortgage. If you have a USDA loan guaranteed by the federal government, you’ll have to wait to refinance within a year.

5. Jumbo Mortgage

Jumbo mortgages are loans designed to finance high-priced properties. As a rule, they entail large quantities of money—at least $650,000—and sometimes the sum can amount to millions. Jumbo mortgages are commonly used to finance luxury residences and those in extremely competitive local real estate markets. Due to their magnitude, they are exempt from the Federal Housing Finance Agency’s (FHFA) loan size and value limits.

If you’re wondering how long it takes to refinance a jumbo mortgage, the answer is: that there is a waiting period of at least 12 months in place to protect lenders from borrowers who may default on their loans. However, if you have a good reason for refinancing, such as a falling interest rate, you may be able to get approved sooner.

How Long Does It Take To Refinance a Mortgage?

After meeting the criteria for refinancing a loan and completing the waiting period, the whole process can take anywhere from 30–60 days. The process is similar to getting a new mortgage, so you’ll need to go through the same steps. Refinancing a mortgage can seem daunting, but it’s really not that bad—here’s a quick guide on how it works:

• Applying for a New Home Loan

First, you have to apply for a new home loan, which you can do through your bank or any other lender. Once you’ve applied, you have to wait for the lender to review your application and give you a decision. Depending on how long this will take, you may have to wait a while before you can refinance a new mortgage, but most lenders will give you an estimate of how long it will take for them to make a decision on your refinance application.

• Lock-in the Rate

If you’re worried the interest rates will go up while you’re waiting for your refinance to close, you can lock-in the rate. This means the lender agrees to give you a certain interest rate, and won’t increase it no matter what happens in the market. However, locking in a rate usually comes with a fee, so it’s important to weigh the pros and cons and calculate the cost to refinance a mortgage before deciding to lock in your rate.

• Getting New Appraisal

If your home has increased in value since you bought it, you may be able to get a better interest rate by refinancing. In order to do this, though, you’ll need to get a new appraisal. Your lender can help you with this process by giving you a few different appraiser options, but getting a new appraisal can add some time to the refinance process.

• Order A New Title Search

When you refinance a private mortgage, the lender will need to order a new title search to make sure there are no liens or other claims on your property. The title search usually takes a few days to complete, but it’s an important part of the refinance process.

• Close the Loan

Once the lender has approved your refinance and everything else is in order, it’s time to close on the loan. This can be done in person or by mail, depending on your preference. You’ll need to sign a bunch of documents and pay some closing costs, but once that’s all done, you’ll have a new loan with a lower interest rate. The average closing costs to refinance a mortgage are usually between 2%–5% of the loan amount.

When to Refinance a Mortgage

Refinancing your mortgage can be a great way to save money, but it’s not always the right choice, so be sure to do your research before making a decision. The best time for mortgage refinancing is when you have equity in your home, there are low rates, and you can get a loan with favorable terms. You should also consider refinancing if you’re looking to consolidate debt or get cash out of your home equity.

Refinance Your Mortgage to Pay off the Loan Quicker

To pay off the loan quickly, refinancing your mortgage is a good option for saving money in the long run. There are a few steps to refinance a mortgage, checking your credit score being the first one since you’ll need a good credit score to qualify for a lower interest rate. Also, make sure the mortgage rates are low and that you understand the fees before refinancing—you should refinance your mortgage when the interest rates drop by at least two percentage points.

Refinance Your Mortgage Gained Enough Equity

If you’ve been making on-time mortgage payments, you may have built up some equity, which means you can refinance your mortgage and get a lower interest rate. The amount of equity you need to refinance varies by lender, but most lenders ask for at least 20% equity. When deciding when to refinance a mortgage, make sure to research which equity loans are best for you.

Refinancing When Looking To Tap a Bit of Their Home Equity With a Cash-Out Refinance

If you need some extra cash, you can refinance your mortgage and get money out of your home equity, which is called a cash-out refinance. Be aware that you’ll likely have to pay for private mortgage insurance (PMI) if you do this. Also, the interest rate on a cash-out refinance is usually higher than the rate on a regular refinance.

Key Takeaways

Wrap Up

If you’re looking to refinance your home mortgage, there are a few things you’ll need to take into consideration, including having a good credit score and sufficient equity in your home and being employed. Although the waiting period for getting your refinance loan approved depends on the lender, as long as you meet these criteria, you should be able to refinance a home mortgage without any problems.