If you are having trouble paying your mortgage and the rates get low, you might be wondering about the right time to refinance a mortgage. This process involves replacing your current mortgage with a new one and lets you save money, lower your monthly payments, lengthen your term, and take some of the equity in your home. While it has many advantages, you can benefit from it only if you follow the rules. Here are the rules for refinancing different types of mortgages:
Tips When Refinancing Your Mortgage
- Refinancing conventional loans. A conventional mortgage is a loan that meets qualification standards set by Fannie Mae and Freddie Mac. It is not backed by the Federal Housing Administration, U.S. Department of Veterans Affairs, or U.S. Department of Agriculture and is not a jumbo loan. When refinancing with the same lender, you might have to wait at least six months. You have the option to refinance with a different lender if you want to refinance a conventional loan as soon as possible. However, there is an exception: cash-out refinances. You are eligible for an exemption if you have owned your home for at least six months unless you inherited it or were awarded it in a separation, divorce, or dissolution of a domestic partnership.
- Refinancing USDA loans. USDA loans refer to guaranteed loans and direct loans. These are mortgage programs offered by the U.S. Department of Agriculture for rural homebuyers. If you have a guaranteed loan, you can refinance it if you have had the mortgage for at least 12 months. Meanwhile, there is no waiting period for refinancing direct loans. Another option for refinancing a USDA loan is you must have made on-time payments in the last 180 days if you get a streamlined refinance or non-streamlined refinance. You must have also been current on your mortgage payments in the last 12 months for the streamlined assist program.
- Refinancing VA loans. VA loans are issued by private lenders and backed by the U.S. Department of Veterans Affairs. You are eligible for them if you are a U.S. veteran, active duty service member, or widowed military spouse. To refinance a VA loan, you have to wait at least 210 days or long enough to have made six payments. This requirement applies for a VA cash-out refinance or a VA Interest Rate Reduction Refinance Loan (IRRRL).
- Refinancing jumbo loans. Jumbo loans have an amount higher than the conforming loan limits. They are an excellent option for you if you don’t have sufficient funds to put down a larger down payment and you need a larger loan than the limit for conforming loans. In most cases, you may refinance jumbo loans whenever you want. Since their amounts exceed the loan limits set by Fannie Mae and Freddie Mac, expect your lender to have stricter requirements than for conventional loans.
- Refinancing FHA loans. You may already know that the Federal Housing Administration issues FHA loans, meaning it’s ideal for low-to-moderate-income borrowers because of its governmental privileges. If you want to refinance into another FHA loan without getting an appraisal, you can take advantage of an FHA streamline refinance. You may want to consider an FHA cash-out refinance if you like to get into FHA refinancing to borrow more than you owe and take the difference in cash. On the other hand, you may choose an FHA simple refinancing if you don’t want to take cash out and are willing to pay for an appraisal.
Refinancing in Los Angeles with Shannon Christenot
The ideal time to refinance your mortgage depends on the type of refinance you want, the type of loan you have, and the lender. Although refinancing your mortgage soon after taking out the first one is possible, you must consider and remember the rules listed above for a hassle-free process.
If you are on the lookout for the best mortgage company in Los Angeles, feel free to reach out to Shannon Christenot. I can help you capitalize on loan rates by refinancing a loan. Contact me at (818) 601-2231 to request a free mortgage rate quote!