If you want your mortgage loan refinance, you might be thinking whether it is possible or not and if possible how many times can you get it refinanced. As a matter of fact you can get yourself refinanced as many times as you like prior to that you meet the financer’s requirements. Some of you refinance the mortgage loans many times during the entire mortgage term but you must take note of the fact that repeated refinancing may not always be a good thing.
Usually lenders do not pose restrictions on the number of times you can refinance. But in order to get approved you must meet all the eligibility criteria. However, one important thing that you must take into consideration is the cost effectiveness of having your mortgage loan refinanced.
Check out the prepayment penalties
Before opting to refinance you must check out the prepayment penalties involved in the loan. If a mortgage loan is paid off prior to the termination of the loan term, then a prepayment penalty is imposed on the loan. Generally a prepayment penalty amounts to a certain percentage of the amount of the loan and the prepayment penalties vary from lender to lender. A prepayment penalty associated with a loan discourages you from getting refinanced for your mortgage loan or to pay off the loan faster.
Find out the closing costs
It is equivalent to taking out a fresh loan and so the closing costs are also involved in it. Closing costs include loan origination fees, application processing fees, recording fees, title searches, appraisal fees and other associated costs. You need to take into consideration all these costs before applying for mortgage refinance. Sometimes the closing costs may be as much as high as 5% of the amount of the loan. The positive effects of refinancing may sometimes be outweighed by the negative effects of the closing costs. So, you need to take note of the closing costs involve in the loan before applying for refinancing or repeated refinance.
You need to keep in mind the following things before you opt to refinance. You should know whether it pays to refinance your mortgage. Check out these things.
If the current rate of interest is lower than the rate on your mortgage loan, then refinance may be a good choice for you. But you need to ensure that the interest rate is low enough so that you will be able to break even after refinancing.
One important thing that you must take into consideration is how long you are willing to stay in the home. If you don’t have plans to stay in the house for a long time period, then getting refinanced may not be a good option for you.
Also check out the prepayment penalties as well as the closing costs involved in the loan. This will help you to find out whether or not the benefits associated with it and outweigh the costs involved in it.
It is to be noted that first of all, you will have to be eligible for mortgage refinance. In case you have poor credit score and inadequate income to pay off the new mortgage, your appeal for getting refinanced may not be approved at all.