How many times can you refinance a mortgage?

By Eric Goodwill

How many times can you refinance a mortgage?  Read here to determine how often you should refinance a mortgage!

With interest rates at all time lows, many people are looking to refinance their mortgage.  While it may make sense to refinance every time interest rates decrease, there are several considerations that should be taken if you are planning on applying for a new mortgage refinance too frequently.

Closing Costs and Fees

The first consideration when wondering how many times you can refinance a mortgage is closing costs and fees.  Every time you refinance a mortgage, you have to pay a significant amount of closing costs and fees.  These include legal costs, appraisals, home inspections, bank origination fees, and points.  When it is all accumulated, closing costs and fees often cost up to 2% of the principal balance borrowed.  It can take 2-3 years to break even after refinancing a mortgage.

Pre-Payment Penalty

The next consideration when wondering how many times you can refinance a mortgage is whether there is a pre-payment penalty.  Many refinanced mortgages come with stipulations that require paying a pre-payment penalty which can be as high as 2% of the outstanding balance.  Most pre-payment penalties phase out after holding a mortgage for three years and are specifically designed to prevent people from refinancing too frequently.

Credit Score

The last consideration when wondering how many times you can refinance a mortgage is to consider your credit score.  Every time you apply for a new form of credit or loan, your credit score is slightly dinged.  If you are applying for a mortgage refinance every few months, your credit score will ultimately be hampered to the point where you no longer qualify for the best interest rates.  To keep your credit score strong, you should not apply for a mortgage refinance too often.

Related posts:

1. If mortgage rates are low, should I refinance?
2. How Often Can I Refinance My Mortage?
3. Can I Refinance My Mortgage If I Have Bad Credit?
4. What Will It Cost Me To Refinance My Mortgage?
5. Is This The Best Time To Refinance With Today’s Mortgage Rates?