How Long After Buying a House Can You Refinance?

Purchasing any home is a major financial occasion, but your mortgage experience doesn’t end once settlement occurs. A majority of owners find the potential to refinance after buying the house shortly after settling in, due to decreasing interest rates or a new personal budget. So, how long after buying a home can you refinance? We want to help you make informed decisions for your mortgage strategy.

Refinancing is the process of replacing your existing mortgage with a new loan that is generally done to obtain favorably new terms, reduced monthly payments, or accessing the equity in your home. Although refinancing provides considerable advantages financially, timing will be a major determinant of when you are able to take this route. After reading this guide, feel free to contact our friendly team at BrickWood Mortgage for more information! 

Refinancing Wait Times for Standard Properties

Almost all lenders demand a waiting time before refinancing your mortgage. The average minimum duration for waiting is six months after your initial date of closing. This clause is called a “seasoning time” and allows the lender to test your history of payment and confirm that you have proved yourself to be a responsible mortgagee.

Nonetheless, waiting times are subject to your type of loan and lender requirements. Most conventional loans adhere to the six-month rule; however, the requirements for government-backed loans such as South Carolina FHA loans, VA, or USDA mortgage may change. It’s possible that the lender will accept refinancing earlier in particular instances, especially when transitioning from an adjustable-rate mortgage to a fixed-rate mortgage.

This period also gives time to assess the value of your property in the current market. Because property values fluctuate, the lender wants to have time to know if your property has increased or maintained its value compared to when you purchased it.

Common Motivations for Earlier Refinancing

Some valid reasons could prompt you to want to refinance shortly after purchasing your house. Most frequently, it’s obtaining a lower rate of interest. If mortgage rates have fallen considerably since the time of the initial purchase date, refinancing will lower your monthly payment and save you thousands throughout the life of the mortgage.

Cash-out refinancing is another popular option for new homeowners. It allows you to borrow against the home’s equity for major expenses such as home renovations, consolidations of debts, or investment opportunities. But you need to have enough equity built up in your home so that you may qualify for the cash-out refinancing.

Other property owners also refinance to escape private mortgage insurance (PMI). If your property has increased or your principal has been paid down enough so that you have 20% equity, refinancing will save you from making monthly PMI.

Working with Mortgage Professionals

Refinancing options are often difficult to navigate without the help of experienced mortgage brokers like ours. It’s a good idea to talk to qualified mortgage brokers in order to gain a better understanding of your refinancing options and the conditions of the marketplace.

Our mortgage brokers can compare offers from multiple lenders, potentially saving you time and money. We understand various lender requirements and can guide you toward programs that best fit your financial situation. Additionally, brokers can help you calculate whether refinancing costs justify the potential savings and provide valuable mortgage refinance advice.

Before giving us a call, have your documents ready, like recent salary checks, tax returns, and your current mortgage statement. Getting this information ahead of time makes the consultation process easier and enables a stronger refinancing analysis.

Making the Refinancing Decision

Refinancing your mortgage is possible during the first year that you own the property, but it’s important to consider the wait time, fees, and long-term goals. While the majority of mortgage companies require a six-month seasoning time, exceptions apply depending on your individual circumstance and type of mortgage.

Prior to refinancing, estimate the overall expenses incurred and weigh them against your possible saving. Our professionals at BrickWood Mortgage can offer individual recommendations depending on the current market conditions and your unique situation. You might ask, how long after purchasing a home can I refinance? Keep in mind that refinancing must be suitable for your overall financial plan and not merely short-term saving!