Can You Refinance Your Home More Than Once?

Sponsored Content: Refinancing your home can offer plenty of benefits. A rate-and-term refinance could save you money by cutting your monthly payment and interest rate. Another option is a cash out refinance that converts a portion of your equity into cash to save, pay off other debt, invest, and more.

But can you refinance as many times as you want? Or are there limits?

In this article, we’ll explain how often you can refinance to help you figure out when it makes financial sense.

How Many Times Can You Refinance Your Home?

Technically, you can refinance your home as many times as you want. There are no rules limiting the number of times you can apply for a refinance. If interest rates are lower than they were when you got your existing mortgage, you may be able to save money by refinancing.

However, there are some other factors that might limit your options when you are looking to refinance your existing mortgage.

Equity

This is more important to keep in mind for a cash out refinance: you must have equity built up in your home to borrow against it. Lenders typically won’t let you cash out 100% of your equity. For example, Discover^® Home Loans offers the chance for you to borrow up to 90% combined loan-to-value (CLTV). This number is calculated by subtracting the total amount of all mortgages on your home from its current market value.

Hard Inquiries

Too many hard inquiries in a short amount of time could have a negative impact on your credit score. While hard inquiries won’t limit how many times you can refinance your home, they can determine what loan terms may be available to you.

Reasons to Avoid Refinancing Too Many Times

Here are some reasons to avoid refinancing multiple times:

Save on Closing Costs

Like purchase mortgages, refinancing typically comes with closing costs. These often range depending on your lender and other factors. That amount can add up fast if you refinance several times. Some lenders offer refinances with no closing costs that can help you save money on these fees.

Protect Your Credit Score

Each refinance application causes a slight ding to your credit score. By refinancing sparingly, you can minimize the damage caused by hard inquiries.

Refinancing: Flexible with Limits

Even though there is no U.S. law that stops you from refinancing an unlimited number of times, you might be limited due to variables related to your financial situation. For example, if you try to refinance too many times, the negative impact on your credit score might make you ineligible with some lenders or you might not have enough money saved to afford closing costs. Also, if you are considering a cash out refinance, you will need to have enough equity available in your home.

With that said, it’s important to get organized and do the math each time you want to refinance.

About Discover Home Loans

Discover Home Loans provides home equity loans and mortgage refinance options with a range of benefits for qualified homeowners. Find options that fit within your budget at discover.com/home-loans. © 2023 Discover Bank, Member FDIC | NMLS ID 684042