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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Surong44’s answer
Surong44, Home Buyer, Carmel, IN
Fri Jun 14, 2013
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
Robert Spino…, Mortgage Broker Or Lender, Mill Valley, CA
Tue May 8, 2012
Asker,

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
rspinosa@rpm-mtg.com
2 votes
Chris Karr, Agent, Carmel, IN
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
NMLS#139834
Amtrust Mortgage Funding
Carmel, IN
NMLS#110928
CKarr@Amtrust.net
2 votes
Rob Weber, Mortgage Broker Or Lender, Plainfield, IL
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
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
tjbannister, Home Owner, Waltham, MA
Mon Mar 7, 2016
You can refi whenever you want. Call another lender, they'll have no problem helping you with a refi. The current bank is worried about the loss they will take. This is not your problem.
0 votes
Scott Polly, Agent, Vienna, VA
Tue Mar 3, 2015
As long as there are no stipulations in your closing documents at settlement from your mortgage lender that says you can't refinance in a certain time frame you can refinance anytime. Most lenders are indicating on the loan documents that there are no pre-payment periods; meaning you can sale or refinance at anytime without a penalty on the sales price. The main thing is to make sure their is equity in your home, as you will pay on closing costs of 3% just like when it was purchased. No equity; chances of refinancing or selling are zero. Scott Polly - Keller Williams Realty - Vienna VA
0 votes
Menike, Home Buyer, Saint Louis, MO
Tue Mar 3, 2015
If the home we fpurchased was previously foreclosed on by Fannie Mae, how soon can we quick claim deed the title into just one of our names? Are there stipulations that would keep us from doing this immediately?
0 votes
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