Mortgage refinancing: How frequently can you use this?
In case you are finding it difficult to repay the mortgage loan and eagerly willing to get some favorable rates or in case you want to consolidate the debts that you owe and pay them off faster, then you can opt for mortgage refinancing. Refinancing actually helps you replace the current home mortgage loan with a new loan with more favorable terms. The new mortgage loan that you take out is secured on the same property as that of your current loan. Again, when you have already refinanced and when you are planning to refinance, one pertinent question that may crop up is, “how many times can you refinance a mortgage?” Anyways, the frequency of mortgage refinancing depends upon various factors including the amount of the mortgage loan and the type of property that you own and the different types of fees attached with it.
Why to opt for mortgage refinancing?
There are a variety of reasons behind why should you opt for mortgage refinancing.
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Lowering the rate of interest
Your monthly mortgage payment amount depends upon the rate of interest. If the rate of interest is lowered down, it means that your monthly mortgage payment will be lower. A low rate of interest implies that you will be able to repay the loan faster.
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Adjusting the term of the mortgage loan
If you want to lower down the monthly mortgage payment, you can do so by raising the term of the mortgage loan. Again, if you want to repay the loan faster, you can do so by decreasing the term of the mortgage loan.
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Switching from ARM to FRM
In case of ARM, the monthly mortgage payment amount varies with the change in the rate of interest. You may find it uncomfortable to different payments in different months and instead you may be willing to switch to the fixed monthly mortgage payments offered by the FRM.
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Getting cash out refinancing
You can obtain a cash out refinancing out of the equity that you have generated in your house. Home equity is the difference between the value of the property and the amount that you owe on your mortgage. You can use the cash out refinancing proceeds for some gainful purposes.
So we have discussed the cases when mortgage refinancing makes sense. But, the question that how many times you would opt for refinancing may arise in your mind. Studies on the mortgage industry reveal that even a few years back, people used to refinance every six or seven years. However, in recent times that scenario has changed. On an average people are now opting for refinancing more frequently because of cheaper mortgage rates. Anyways, there is a rule pertaining to the number of times you can opt for refinancing during a certain period of time. In case you are refinancing your present credit, the waiting period varies between 6 to 8 months. Again, in case you are attempting to obtain a larger loan than your original amount, the waiting period is 1 year.
You need to however keep in mind that by refinancing you are actually taking off the burden temporarily only to undertake another. Many other fees such as title & footage fees, review fees, assessment taxes come along with mortgage refinancing. So, it is up to you to decide how many times you can refinance a mortgage loan.
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