How Soon After Refinance Can I Refinance Again (And Why)?

Exact Answer: After about 6 months

Refinance may be defined as the procedure to revise the rules and regulations of an agreement related to the credit. It is mainly related to either loans or mortgages. Whenever you wish to refinance your agreement, you can make any changes regarding the agreement suiting your choice. When the agreement is approved, you can go for a new contract instead of the old one. It is basically to introduce changes in the terms of the existing loan or any such credit activities.

Generally, people refinance when there is a sudden fall in the interest rates of the loans. It would also involve the evaluation of the person’s income sources for the second time. Refinancing is usually done to reduce the loan amount, rate of interest, duration of repayment. It is even done to convert the type of mortgage which would be beneficial to the individual. A good credit score is essential to be eligible for refinancing.

How Soon After Refinance Can I Refinance Again?

TypeTime
Conventional 0-6 months
Cash out6 months

Due to the various monetary policies introduced by the National government, the economic environment keeps on changing. Due to the change in environment, the rate of interest of various loans keeps changing with time. This becomes the main reason why some people go for refinancing. As the rates of interest keep on increasing, you have to pay the greater amount to get out of the vicious cycle of the loan. In cases when the rate of interest falls, you would get rid of the loan within a small amount and would also save some money.

Looking at your needs and necessities, you can decide the type of refinancing he/she wishes to go through. The first one of them is related to rates and terms in which you have already cleared out the payments of the existing mortgage/loan and later, it gets exchanged for a new loan with new terms and agreements. This is the most commonly preferred type of loan and is beneficial for the person wishing to take it.

There is another type of refinancing i.e the cash out one in which the owner had previously kept some of his valuable possession as a mortgage. In this refinancing option, when the price of the asset increases with time, you can ask your lender to give you the loan of the asset without losing ownership of the product. This gives you enough time to repay the loan without being under pressure under the fear to lose ownership.

Not just these, there are other types of refinancing. One of them is the cash in one, during which you have to pay some amount of the loan and have minor payments to be paid later. The consolidating type of refinancing is the best one for any individual who wishes to go for a new loan with a comparatively lower rate of interest than the existing one. The main provision which gives an extra edge to individuals going for this type of financing is one can go for a new loan even while being under the impression of an existing one.

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Why Should I Wait So Long To Refinance Again After Refinance?

There are various ways of refinancing a second time after an existing refinancing. The duration of the loan and the rate of interest can be shortened leading to some extra savings. The types of interest can even be converted suiting the demands of your financial condition. You even have the provision of getting out of the pressure of mortgage and loan within a short time without losing extra money.

Well, there are even some disadvantages that may stop you from going from refinancing. If by chance, the duration of the loan gets back to the original one after refinancing, then you would have to bear the pain of spending extra money behind repaying loans. When the duration of the loan gets shortened, one may have to pay the closing costs at the end of the refinance. In some cases, if there is a fall in the interest rates, then you would be at a loss if you had chosen a mortgage with a fixed rate. In such cases, you would need to refinance again.

If you wish to refinance after refinancing, then you need to consider the type of mortgage or loan you wish to take. If you wish to go for a conventional loan then you can go for it anytime after getting your existing refinance closed. If you deal with the same person once again, then you would have to wait for a minimum time of 6-7 months. In cases where you wish to go for the cash-out type of refinancing, then you have to wait for a minimum of 6 months. It applies to all types of loans.

Conclusion

Refinancing is always helpful for the individual. While it is generally recommended not to go for refinancing until the breakeven period, one can go for it if he/she needs it at the utmost. Taking a view of your financial condition would help you because you would have to pay the debts of both the loans. If you are financially strong enough to go through two debts at one go, then you easily go for it by paying the prepayment costs.

If you wish for refinancing, then calculate the rates of interest of both loans. You even need to pay the closing costs. Hence, you need to think twice before thinking of refinancing again.

Reference

  1. https://pubsonline.informs.org/doi/abs/10.1287/mnsc.2015.2272
  2. https://www.sciencedirect.com/science/article/pii/S0377221704002255
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