Is There Such a Thing As Refinancing Too Often?

Today’s mortgage rates are near the lowest we’ve ever seen.

The first time you refinance your mortgage was probably the right thing to do at the moment, but if you are thinking of doing it again, you may be doubting if it will turn out well. Yes, we know that feeling of wonder and confusion, because, how often should you refinance? Or, is it okay to refinance twice?

If one thing's for sure: you can certainly do it, what is difficult to determine is how convenient it is! But don't worry, you can do it with the help of experts like the ones here at Intercorp Mortgage Solutions. Now, this will depend on how long you plan to stay in the house, closing costs, and if the benefits outweigh the costs. We definitely can help you do the math and make ends meet. Keep reading to see the bigger picture!

What's on your plate?

Refinancing your mortgage come can help you get better interest rates, convert an adjustable-rate loan to a fixed-rate, for instance. You can also pay for remodeling, or other things for your home, and change the term of your investment.

If you are up for a second refinancing, your lender may consider you should wait if you started paying your current mortgage just a year ago, for example. It happens because there are mortgage contracts that are attached with prepayment penalties if you refinance, or otherwise, pay the loan off before your decided end of debt.

The prepayment penalties are the lenders' protection. There are mortgages that charge a higher rate in exchange for waiving the closing costs. Many people do not know if this figure is in their contract, so you should check before proceeding with a refinance.

Now, let’s say that you are convinced of doing it again. A critical factor that comes into play is how long it will take for your savings from refinancing to exceed your closing costs. In other words, by reaching your break-even point, you can calculate whether refinancing would be worthwhile. For this to happen, you must be sure that you can recover your costs in reasonable time.

What experts and lenders took into consideration is not that you want to refinance too often, but if the savings on the new mortgage are (or not) enough to make refinancing possible. At that very moment, they will also evaluate how much of the principal have to increase despite interest rates deductions, because you will have to repeat closing costs.

But they can allow you to have more time to pay off the loan so you could pay less every month. Let’s say that your mortgage for 15 years will be extended for one of 25 years, and the interest costs increase. Refinancing again has advantages and its downsides. Contact us at Intercorp Mortgage Solutions to help you make a decision by locating all of this in the hands of our expert advisors!

In which circumstances is it a good idea to refinance your mortgage once again?