How Soon After Buying a Home Can I Refinance It?

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Once you’ve found your dream home, and signed on the dotted line for your mortgage loan, the deal is done. But what happens if a better mortgage rate becomes available after you begin making payments on the mortgage you just received? Can you refinance immediately?

A borrower signs a mortgage contract with a toy house to the side
In some cases, refinancing a home relatively soon after purchasing it could make sense for your unique financial situation.

Why Refinance Soon After Buying a Home

You may be wondering why after immediately buying a home someone may want to consider refinancing their home. One of the more common cases is that market interest rates drop, making a lower mortgage interest rate available. If you were to refinance your mortgage for a lower rate immediately, it could lead to major savings over the 15 or 30 year period that your mortgage will last.


Some other common reasons that someone may quickly consider refinancing after buying a home:

  • To reduce monthly payments by making the loan for a longer period of time
  • To pay off the mortgage faster by shortening the period of time the mortgage is for
  • To change the type of mortgage (i.e. you took an adjustable-rate mortgage but want to convert it to a fixed-rate mortgage or vice versa)
  • To tap into the home’s equity due to financial hardships, home improvements, or a necessary major purchase
  • The borrowers’ credit rating has improved making them eligible for a better rate
  • To reflect a marriage or divorce, and the need has arisen to add or subtract someone from the mortgage


How Long After Buying a Home Do You Have to Wait to Refinance?

In some cases, your mortgage lender will allow you to refinance immediately. In these cases, rules regarding the refinance or penalty payments could apply. The specific answer about how long someone may have to wait to refinance after buying a home is specific to the type of mortgage they have, the length of the loan, and the lender’s specific policies.


Some mortgages have penalties if you refinance your loan within the first three to five years of buying a home and obtaining the original mortgage.


A cash-out refinance, in which someone borrows extra funds against the home’s equity typically has a six-month waiting period, whereas if your original mortgage was funded with an FHA loan and you want to refinance it with an FHA Streamline Refinance, you’ll typically be asked to wait 210 days from the original closing date.


Even if your current mortgage rate is only a part of a percentage higher than today’s rate, a small reduction in this interest rate could save you thousands of dollars over the lifetime of your loan meaning that you’ll get more long-term benefits if you refinance sooner rather than later when rates might not be as good.


Remember to calculate any fees or points you may have paid for the original loan or you are being asked to pay for the new refinance to determine how long it will take to break even with cost savings.


Are you interested in refinancing your mortgage loan? We’re here to help!


Let Camino help you. We want our members to find the best option that works for their needs. We offer many options for those looking to purchase or refinance a home. Please give us a call at 800-835-3400 to speak with one of our Member Advisors, or contact us for more information.  NLMS ID 666196