My sister Katie bought a house in September last year. By October she’d already refinanced it. One month. I’ve been asking her to explain how she did it for like six months now and I’m still confused. But I learned a lot about how soon can you refinance a mortgage from her crazy situation.
Katie closed on her house September 8th. The rate was 7.6% which is pretty awful but she really wanted the house and that’s what she qualified for. Three bedroom place in a decent neighborhood for $315,000. She put down 10% which was $31,500. Payment was around $2,180 a month including everything.
Turns Out She Had a Construction-to-Permanent Loan
Katie finally sat me down and explained the whole thing properly. She didn’t get a regular mortgage when she bought the house. She got something called a construction-to-permanent loan because the house needed work before she could move in.
Basically the house was a fixer-upper. Needed new electrical, new plumbing, new HVAC. Wasn’t livable when she bought it. So instead of a regular mortgage, she got this construction loan that would convert to a permanent mortgage once the work was done.
My Situation Was Totally Normal and Boring
I bought my house three years ago with a regular conventional mortgage. Nothing special about it. Rate was 5.9%, house was $285,000, put down 15%. Standard boring mortgage stuff.
Wanted to refinance about a year later when rates dropped to 4.8%. I called my lender and they said I could, but closing costs would be around $5,200. Would save me about $160 a month, so break even would be about 32 months. Seemed reasonable.
Talking to Katie made me realize how soon can you refinance a mortgage is totally different depending on what kind of mortgage you started with. Her construction loan situation let her change rates way faster than my conventional loan ever could.
Other Weird Situations Where Fast Refinancing Works
I started researching this more because Katie’s story got me curious. Found out there’s actually a bunch of special situations where you can refinance faster than the normal six month wait.
If you have an FHA loan and you’re doing an FHA Streamline refinance, you only need to wait 210 days after your first payment. That’s like seven months, not six, but still faster than some conventional loan requirements.
The point is, asking how soon can you refinance a mortgage doesn’t have one answer. Depends completely on what type of loan you have.
When Normal People Can Refinance
For those of us with regular conventional mortgages – which is most people – the rules are pretty standard. Most lenders want you to wait at least six months. Some want a full year.
There’s no law saying you have to wait. It’s just lender policies. They don’t want people refinancing constantly because it costs them money. So they make you wait a while to protect their investment in your loan.
You can try to find a lender who’ll refinance you earlier, but they’ll usually charge way more in fees. Like if normal closing costs are $4,000, they might charge you $7,000 or $8,000 to refinance at four months. Probably not worth it unless rates dropped massively.
Katie’s Advice About Loan Types
After explaining her construction loan thing, Katie said I should pay more attention to what type of loan I’m getting when I buy a house. She didn’t even realize her loan was different until rates dropped and she started asking questions.
She said different loan types have different rules, different costs, different refinance options. If you’re buying a fixer-upper like she did, construction loans might be cheaper in the long run than getting a regular mortgage and then paying for renovations separately.
Now I know to ask more questions about how soon can you refinance a mortgage before getting a loan in the first place. Because the type of loan you start with determines what you can do later.
What Happened With Katie’s House
Katie’s been in her refinanced mortgage for about eight months now. The renovation work on her house is done – looks amazing honestly. New kitchen, new bathrooms, everything updated. She’s saving like $215 a month compared to what her payment would’ve been at 7.6%.
The total cost for her to convert from construction to permanent was only about $1,800. Way cheaper than normal refinancing. She said that’s because they already had the appraisal from September, already had all her paperwork, just needed to finalize some stuff.
What I Learned From Katie’s Experience
The main thing is there’s no single answer to how soon can you refinance a mortgage. Depends on your loan type, your lender, your situation, a million different factors.
If you have a special loan type like construction, VA, FHA, USDA – research what refinance options come with that loan. Might have programs that let you refinance faster and cheaper than conventional loans.
If you have a conventional loan like me, plan on waiting at least six months. Use that time to improve your credit, save for closing costs, and watch rates.
My Current Situation
Still in my refinanced mortgage from two years ago at 4.8%. Rates have gone up since then so I’m glad I refinanced when I did. Katie keeps rubbing it in that she got 6.8% which is better than my original 5.9% even though it’s higher than my current rate.
Whatever, I’m happy with how things worked out. Her situation was unique and mine was normal. Both of us ended up better off than we started.
If someone asked me how soon can you refinance a mortgage, I’d tell them it depends on their loan type and they should call their lender to ask. Can’t give one answer that applies to everyone because everyone’s situation is different.
Katie taught me that even though her explanation still confuses me a bit. Construction-to-permanent loans, conversion dates, temporary rates – it’s all over my head. But I get the basic point that different loans have different rules.
And I learned to not assume I know how things work just because I’ve done them before. My mortgage experience was totally normal and standard. Katie’s was weird and different. Both valid, just different.
The answer to how soon can you refinance a mortgage is apparently anywhere from one month to a year depending on like fifty different factors. Not helpful as an answer but that’s reality.