Are you planning to refinance your home? But before that you want to know about how soon you can refinance your home, right? You are not alone. There are many home owners who want to enjoy the lower interest rates but they step back just to worry about the time consuming refinance process. But not now, with the right planning and smart strategy, you can easily and timely refinance your home. Stay Connected to know more about How Soon Can You Refinance Your Home.
No doubt, the time to refinance the home loan depends on the loan type, lenders policies and more but still you can refinance home sooner than you think. If you are also planning to refinance then keep this blog reading because in this blog, we are going to cover the detailed guide on How Soon Can You Refinance Your Home?
How Far Can You Refinance Your Home?
You can easily refinance your home by:
- Immediately for conventional loans
- After 6 months for cash out refinances
- After 210 days for VA Loan
- After 12 months for FHA loan
But the accurate timeline depends on your existing loan.
What are the Waiting Periods According to Loan Type?
Here are the waiting periods for different loan types:
Conventional Loan
In Conventional loans, the rules are flexible. There is no waiting period required. You can easily refinance as soon as your loan closes.
Note: For cash out refinance, it is mandatory to wait for 6 months and at least make 6 consecutive payments.
FHA Loan
FHA loan is only based on the loan type:
- FHA Rate and refinance require a 6 month waiting period.
- FHA Cash Out Refinance requires a 12 month waiting period.
- FHA streamlined refinance must require 210 days.
VA Loan
The VA loan also depends on several loan refinance types. Lets see:
- VA IRRRL must require 210 days from closing
- VA Cash out refinance must require at least 210 days.
USDA Loan
The USDA loans also depend on their refinance types. Here are:
- USDA Streamlined Refinance require 12 months to refinance
- USDA Non-steamlined Refinance requires 12 months but eligibility match is must.
What Factors Affect Your Refinance Home Loan Timeline?
Not only one, but there are multiple factors that affect the refinance home loan timeline. Lets see:
Lender Specific Rules
All the lenderlenders have their own internal policies that decidesdecide how mushmuch time you have to wait to refinance the home loan. As someSome lenders allowsallow immediate refinance and some require 6 or 12 months to refinance the home loan.
Breaking Even
As we all know, refinancing always comes with some closing cost. Before approving for the refinance, lenderthe lender always seesees the break even- which means your monthly savingsavings should be more comparecompared to the cost of refinance.
Your Credit Score
The credit score always matters for the refinance home loan timeline. BeforBefore approving for the refinance, lenderthe lender always verifies that you are a trusted borrower or not. SometimeSometimes, borrroweersborrowers are not able to pay monthly rates if goesif it goes high thatshigh. That’s why your credit score really affects the timeline.
Your Home Equity
The home equity is the portion of loanof the loan that actually youyou actually ownsown. If you are taking a cash out refinance, then home equity plays a major role. Most of the lenders require 20% home equity and higher home equity means to fastermeans faster approval and faster refinance.
Also check- Is Now a Good Time to Refinance?
When Should We Get Refinance for Home?
RefinanceRefinancing the home loan anytime is not a good option. There are some time when the refinance is beneficial, lets see:
- Interest rate drop atleastat least 1%
- Your plan to stay is for long term
- You have mproveimproved DTI and Income
- You wantswant to switch from ARM to Fixed Rate
- You need cash for major expenses
What are the Benefits of Refinancing the Home Loan?
As we all know, Refinancing the home loan feels like we are starting a chapter again in a new way. The refinancing of loan comes with many significant benefits such as:
Lower Monthly Payments
Behind choosing the refinance home loan, one main reason always lies that is lower monthly payment. If you refinance your home loan with a lower interest rate and extend your loan period then it significantly decreases your monthly payment.
Securing a Lower Interest Rates
As we all know, interest rates rise and fall according to market conditions and when the rates are at their lowest and you lock in your refinance rate, then it is very beneficial for you. It significantly reduces the interest paid over the year.
Switching from Adjustable Rate to Fixed Rate
The ARM comes with low rates but it can rise according to the time. In fixed rate, the interest rates stay the same over the loan period. If you get ARM in starting then you can easily refinance them into a fixed rate mortgage.
Shortening Your Loan Term
In case, your incomes increase in the future, then you can easily pay more monthly and make your loan term short and it also allows you to get faster home equity. It also allows you to save a huge amount of interest with refinancing.
Dont forget to check: How Much Does It Cost To Refinance A 30-Year Fixed Mortgage?
Final Thought
First of all, refinancing the home is not confusing and time consuming at all. But if you understand refinance properly and use right planning then you can easily make your home refinance sooner. Before refinancing, always compare the lenders, check your credit score, and understand your break even point, and then refinance your home.
FAQ about How Soon Can You Refinance Your Home
Q. Will my employment also affect the refinance?
Answer: Your employment is the major factor that affects the refinance of your home loan. Before approval, lenders always verify your ability to bear the refinance loan and after that they approve. Lender always check:
- Your employment history
- Type of Job
- Recent Job Change
- Income Stability
Q. What is the best time to refinance the home?
Answer: The best time to refinance the home is when the rates are low and you have high income to get the home equity faster.
Q. Does early refinancing help to save more money?
Answer: Yes, early refinancing always helps us to save more money but only when the situation is right. You can save more only when the rates are low and you want to eliminate PMI early.
Q. Can we approve a same day refinance for a home loan?
Answer: Yes, same day approval is possible but this is very rare. Before the approval, the lender checks and verifies multiple things that take a lot of time.
