‘How many times can you refinance a mortgage?’ This is a question that several home owners ask when considering whether to refinance their loan for the second or third time. Theoretically, you can refinance your loan as many times as you like. There are no rules governing the number of times you can refinance a mortgage. Usually the lenders follow some guidelines around the period before they can offer a refinancing solution, but even that varies from institution to institution and it is often negotiable.
However, there are some practical considerations to how many times you should opt for mortgage refinancing and your reasons to refinance should be financially sound.
There could be several reasons to consider refinancing your mortgage; a few common ones are listed below:
Home owners look to refinance their mortgage for direct financial benefits. However, it is always a good idea to carefully assess your costs of refinancing before opting for it. Often, the switching costs like the loan prepayment penalty are quite high and have a long payback period, in which case it makes little sense to refinance the mortgage. Even if you are refinancing to shorten your mortgage payment period, it is important to check the financial benefit of the option. Consulting a mortgage broker or consultant is advisable to look into these aspects.
While refinancing your mortgage can benefit you in several ways, doing it too often is generally not a good idea. When you refinance your mortgage multiple times, your switching costs for each refinancing accumulate, and you can easily end up spending more than you wanted to save.
Another disadvantage of refinancing your loan several times is that it reflects poorly in your credit history and if you are a habitual user of these programs, the lending institutions may no longer be interested in offering you loans.
There are several aspects that you need to look into when refinancing a mortgage, and it is advisable to use an experienced mortgage consultant or broker who can weigh your options and offer sound advice to you. The important question is not how many times can you refinance a mortgage, but whether a refinancing option makes financial sense or not.