Did you recently buy a house and want to save money on your mortgage? You’re probably wondering: How soon after buying a house can you refinance? Keep reading to discover what the experts in cash-out refinance in Texas say about the best time to refinance your home.

What Is Refinancing?

When you refinance you apply for a new home loan to replace your old one, usually with the intent to save money on interest rates. You can apply for two types of refinancing:

• Rate-and-term changes: With this option, you can change your loan terms to more favorable ones, such as lower interest rates or increasing the life of the loan, so you have lower monthly mortgage payments. No money exchanges hands during this type of refinancing.
• Cash-out: With this type of refinancing, you take out a new mortgage for higher than your home’s value and the bank pays out the difference directly to you as cash. You’ll pay closing costs for this new mortgage.

Benefits of Refinancing

Why do people choose to refinance? It can have several benefits, such as:

• Saving money: Refinancing can save you thousands of dollars by lowering your monthly mortgage payments. You can usually reduce your interest rate by 1-2%.
• Faster payment: If you can afford a higher monthly payment, consider switching from a 30-year term to a 15-year one so you can own your home sooner.
• Equity access: A cash-out refinance can put a large sum of money directly into your bank account.

Waiting Period by Loan Type

How soon after buying a house can you refinance? The answer largely depends on the type of loan you have and its associated mortgage laws. You likely have one of the following loan types:

• Conventional: You won’t have a waiting period if you want to change the rate and term but must seek a different lender. If you want a cash-out option, you must wait at least six months.
• VA: If you have a loan from the Department of Veterans Affairs, you must wait 210 days and make at least six payments.
• FHA: With an FHA loan, you must make at least six payments before traditional refinancing. If you’re taking the cash-out option, you must wait 12 months instead.
• USDA: With a loan from the Department of Agriculture, you must make 12 payments before you can refinance.

When Should You Refinance?

Even if you don’t have a waiting period for your loan, you should carefully consider whether your refinancing will benefit you. Refinance in the following situations.

Decreased Loan Rates

If you have a fixed-rate mortgage and you’ve seen average interest rates lower since you took out your loan, you could save significant monthly by refinancing. If you have an adjustable-rate mortgage, your interest rates show lower automatically.

Improved Credit

Your interest rates largely depend on your credit score, so if you’ve improved your rating since you signed your loan, refinancing should lower your rates.

Different Loan Type

If you want to switch from an adjustable-rate mortgage to a fixed-rate mortgage (or vice versa), refinancing is an excellent option. 

Increased Home Value

A cash-out refinance is a great option if you’ve recently experienced an increase in your home value. If you can obtain favorable rates, you can use the cash payment to pay off other debt with higher interest.

Contact Your Refinancing Experts

How soon after buying a house can you refinance? Usually within 12 months or less, but just because you can refinance doesn’t mean you should. From helping you understand your mortgage options to finding you the best rates, Champions Mortgage does it all.

Speak with an experienced mortgage expert when you call  (281) 727-2500.