Home Buying in 46033>Question Details

Asker, Home Owner in 46033

how soon can I refinance after buying a home?

Asked by Asker, 46033 Tue May 8, 2012

Bought a home last month and would like to refinance at a rate 50bps lower than my current one which was locked in around 3/20 when it was relatively high. My current lender has no prepayment penalty but I heard I still couldn't refinance until after at least 4 months of closing due to some Fannie May requirements. Is that true?

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Rob Spinosa’s answer

The answers below are very good. One word of caution if switching to another lender is that you'll likely need a new appraisal. If your property was appraised at 80% loan-to-value for the purchase, it will need to do so (at least) again, in order for you to take advantage of any lower rate. If you're sure the value has remained stable or increased, you should be fine, but look closely a recent sales to make sure nothing would undermine your best intentions.

Rob Spinosa
2 votes Thank Flag Link Tue May 8, 2012
You can refinance immediately, probably not with your current lender though. The new lender/bank will use the purchase price as value, and you will still be required to pay closing costs and probably start up a new escrow account. You need to figure out if 0.5% lower will benefit you enough. You are probably better off by making additional payments to the principal balance since you don't have a pre-payment penalty.

Chris Karr
Mortgage Loan Originator
Amtrust Mortgage Funding
Carmel, IN
2 votes Thank Flag Link Tue May 8, 2012
Typically you can't refi so soon with the same lender because the investor (Fannie Mae in your case) paid a "servicing release premium' (Fannie Mae isn't in the "loan payment chasing" business which is what the current lender aka servicer does post-close) to your lender/servicer and they won't pay another one so soon so that's why you're having push-back right now.

Additionally, remember you're going to have to pay closing costs again on the new loan so that may negate the benefit you gain from a 0.5% lower rate now. You should carefully weigh the short term costs vs the longer term gains to see if it makes sense to refinance.
Web Reference: http://RobWeber.com
2 votes Thank Flag Link Tue May 8, 2012
Rob, thank you so much for your quick reply! Your explanation makes sense for the current lender. But how about refinancing with a different lender? Does the Fannie Mae "servicing release premium" still apply and restrict me from refinancing with a different lender? The 0.5% lower rate is 0 cost refinance rate, so I will be saving for sure if I refinance.
Flag Tue May 8, 2012
I was approved for my home mortgage for a new house,as my second home. and now i was given a letter to sign for this house as my investment house ,that i will be renting the placce when i am not there. what to do.
0 votes Thank Flag Link Fri Jun 14, 2013
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