Question by Heather A: How long do you have to pay on an existing mortgage before you refinance for a lower interest rate?
I have not yet bought a home but I am curious what effects refinancing. Is it based on how much equity you have built?
Answer by EDDie
You should read your loan documents to find any clause that limit the time before you can refinance. The average is 2 – 3 years without penalty. You can still refinance before the 2 year period but you will incur penalties.
Add your own answer in the comments!
whenever you would like… YOu may though have a pre payment penalty…
in that case it will cost you money to refinance the loan….
but if no pre pay, then you can refinance after 3 months…
you can pull out a home equity line of credit at any time, but i wouldnt suggest it unless you can pay it off 6 motnhs later…
not only is it a high variable rate, if you carry it for a long period of time it can be bad for credit..
Do you have a mortgage banker helping you with the financing of this house??? They weren’t able to answer this questions??
All of my clients have me do their financing with their homes becuase they know if they have a question, they can call me and ask…
If you need someone that will take the time to thoroughly explain the entire mortgage or refinance process, feel free to cal lme..
My name is Jason Fry, i work for Providential Bancorp, a nationwide mortgage lender.. Feel free to call me at 312-264-6448, or email me at email@example.com..
feel free to look at my profile here as well…I have sucessfully helped numerouf people from this site either purchase a home, or refinance an existing mortgage!!
thanks, and good luck!
Licensed Mortgage Consultant
Most lenders require 6 months seasoning before you are able to re-finance the home, however there are lenders who will re-fi with no seasoning. I most cases it’s best to wait 2 years because there is generally a pre-payment penalty attached if re-fied before 2 years.
Much like the other answers from previous people, some lenders do require 6 months for seasoning of a loan. You will need to get full details on the current mortgage (i.e. monthly payment, interest rate (fixed, adjustable)) vs. the new rate and payment you would get, payments, to make a decision on whether it is worth it to refi (switching from interest only to principle+interest, lower interest rate available at the time, etc.)
as stated before, make sure you do not have a prepayment penalty – i just did a loan for someone where she did not realize there was a pre-pay penalty and the charge was $ 15,000! if you save money in the long run then it may be worth it.
as far as your question on what options you have when equity has built on the home you bought, you will be able to refi for a higher amount(on the first mortgage – 80% without mortgage insurance), but you will owe more on the property. you can refi to consolidate the first loan you got when purchasing the home, to tak cash out of the property (equity), or to secure a better rate. also instead of refinancing the first, you could get a new 2nd mortgage, or also refinance the current 1st and 2nd mortgage into one loan.
there are so many options, and an educated answer has to have some more details – home price credit score, etc… i would suggest finding a loan officer you trust and going from there.