Some mortgage refi rates are now below 2.5%. So how often is too often to refinance?

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Did you refinance relatively recently only to see rates drop again? With Mortgage Refi Rates Still Nearing Record Lows (Some 30-year rates are around 3% and some 15-year rates are around 2.5%, as you can see here)You might be wondering how often you can refinance. The answer is often that you can refinance as often as you want, says Holden Lewis, home and mortgage specialist at NerdWallet. “The main exception is cash-out refinancing. In most cases, you have to hold your mortgage for six months before you can refinance it for more than you owe,” Lewis says. Find the best mortgage refinance rates in your area here.

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Together Today’s Low Rates, more consumers are refereeing back-to-back. Actually, data Freddie Mac It shows that there was an increase in repeat refinances in the previous year, including loans that were refinanced two or more times in a 12-month period: “In 2020, 10.1% of refinances were repeat refinances, up from 7.8% in 2019″ Above,” writes Hostage Vishal.

Is Refinancing Right For Me?

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With rates near historic lows And with home values ​​at record highs, many loans that are a year or more old can be good candidates for refinancing, says Jonathan Lee, senior director of mortgage sales for Zillow Home Loans. “Higher home values ​​mean that the difference between your mortgage rate and the refinance rate can be as low as .25% in some cases and still make financial sense,” says Lee. A higher home value may mean that you can get rid of private mortgage insurance, assuming you reach 20% equity in your home. You can also consider shortening your loan term, for example from 30 years to 15 years, which can save you thousands of dollars over the lifetime of your loan.

But do the math, because a refinance doesn’t always make sense, and the general rule is that you’ll want to save about half to three-quarters of a percentage point to make it worth it, Lewis says. And watch your break-even point, too, so you can be sure you’ll cover the costs of the refinance before you sell the home, says Denny Czik, senior staff writer at LendingTree: “The break-even is calculated by dividing the total debt by The cost by the amount of savings. If the cost to refinance is $5,000 that would lead to a savings of $200 per month, the refinancing break-even point is 25 months. If the homeowner plans to keep their home for at least 25 months has been, they will cover their costs and refinancing makes sense,” says Cezic.

Are there any restrictions on refinancing?

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Besides the fact that if you’ve done a cash-out refinance you typically have to wait about six months to do another refinance, there may be other rules. Ceizyk says it’s important to note that with some government-backed FHA, VA, or USDA loans, a waiting period between refinancing may be necessary. Find the best mortgage refinance rates in your area here.

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