Can I refinance after only 3 months?

Deal Score0

My credit is less than perfect so I had to take out two mortgage loans to buy my house — I didn’t have enough for a down payment.

My house was appraised at $ 15,000 more than what I paid for it. I’m paying a pretty high rate – 8.25% for both loans. I’m wondering if I can get a refi large enough to lower my payments with enough left to do some small home renovations and pay some bills? My credit rating is much better than it was when I bought the home but it’s still under 700. I’ve lived there for 3 months and don’t plan on moving for at least five years if not longer — is this too soon to look for a refi?

Thanks in advance!

  1. Reply
    May 2, 2011 at 3:06 am

    Three months is not much of a track record but run it by your lender they may refi just to keep you as a customer. Also be aware of prepayment penalties.
    also check with other lenders.

  2. Reply
    May 2, 2011 at 3:54 am

    I’d avoid it if you have a prepayment penalty. If so, perhaps you can just refinance the 2nd.

    There’s tons of mortgage products out there, some that will allow you to refinance this soon and actually allow you to use the higher appraisal. Not all, but some will.

    You’ll end up paying all those closing costs all over again, so out of that $ 15K, you might only have 8-10K to use towards other things, so you’ll really have to figure out if it’s worth it. Unless you can get a lower rate on your first mortgage, I wouldn’t recommend it.

  3. Reply
    May 2, 2011 at 4:25 am

    Technically you can refinance immediately. Many lenders will not be interested but some will.

    You will not be able to borrower more than you paid. The lender will only work from the value or the purchase price what ever is lower. This will apply for 6 to 12 months. Note that there might be a lender who would consider using the higher value but they will likely expect a higher interest rate or higher fees.

    Refinancing now and taking out cash for improvements is going to cost you money in loan fees plus it will raise your payments most likely. Hence it is not likely to accomplish much other than raise your costs and your debts.

    Best to wait a bit. Continue to work on the credit score. Consider a part time 2nd job if you want to build up extra cash for paying some bills and funding the improvements.

  4. Reply
    Paineless S
    May 2, 2011 at 5:20 am

    Most lenders require at least 6 months in order to do a refinance, many require a year. If I were you, I would stick it out for another 3 months, keep up on your bills and then start looking. your credit score will be better and your payment history will be more solid as well.

  5. Reply
    Mr. Knowitall
    May 2, 2011 at 6:08 am

    Yes – to qualify for the best rate, you have to have owned your home for 12 months before refinancing using the appraised value. Less than 12 months, lenders require you to use the purchase price to determine your loan-to-value ratio, and you’re probably still close to 100% of that.

    After 12 months, you will be able to refinance to combine both loans into one note, but in order to do a cash-out refinance, you have to borrow 90% or less of the value of the property, if you’re looking for the best rate. These guidelines are set by Fannie Mae and apply to all “conforming” lenders (lenders with the lowest rates).

  6. Reply
    May 2, 2011 at 6:20 am

    Too soon, don’t do it. When you refinance, you pay fees that are $ 1,500 to $ 2,500. The savings of $ 50 a month on the payments will not be realized until you pay the fee to refinance (30 to 50 months). You can do small home renovations, (painting – wood work – tiling – re-caulking). Use pocket change for these projects, you will have to give up a night at a restaurant.

  7. Reply
    Jonathan D
    May 2, 2011 at 6:30 am

    You can refi. If you go conforming you can refi one day out of sale or right after the 3 day resion period of a refi. It is never wise unless you are in a really high rate. If you have at least a 680 you san do a 80/20 and go conforming and save you from that 8 and put you at a 6.125 or 6.5. Of course there is other stuff that goes along with qulifing but if you want to get the rate before they go up and stay up for a while i would suggest finding someone that will cut you a break on origination and jsut have them make points on the back. No one will do a loan for free but you can find someone that will make 1.5 on a 30 year fixed at 6.275. Brokers will do anything for a deal. If you really want a low rate. will bring lenders and brokers to you. Just make sure you ask what the par rate is before you let them pull your credit. We can get exception on alot but not scores. if you are around a 650+ and have 20companys pull your credit you will soon find yourself at a 590 and not relize it. hope that helps.

  8. Reply
    Mike R
    May 2, 2011 at 7:30 am


    you might check out following sites on refinancing mortgages. Maybe call ’em up and see what they can do for you:

    Hope that helps. Wish you all the best!


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