You’ve likely heard the news by now, mortgage rates in Hawaii are at all time lows. Who wouldn’t want to refinance, right?

But how soon is too soon to refinance?

The answer is twofold. First, you must follow the guidelines, which we discuss below. Second, make sure it makes sense for you to refinance.

How Soon you can Refinance

First, let’s look at how soon you can refinance based on the type of loan you need/want.

  • Do you have an FHA loan? To use the FHA streamline refinance program which has low fees and simple qualifying requirements, you must wait until you’ve had the current loan for 210 days.
  • Do you have a conventional loan and want a rate/term refinance? Most conventional lenders don’t require you to wait a certain amount of time to refinance to take advantage of lower rates or a better term.
  • Do you want to take cash out of your home’s equity? Most lenders require you to wait 6 months before you tap into your home’s equity. You must prove you can afford the current loan first. You’ll only have usable equity in your home in 6 months if you made a large down payment too.

How Long will you be in the Home?

This is the next factor you should consider. refinancing may sound great, who wouldn’t want to save money? But if you won’t be in the home for more than a couple of years, it may not make sense to refinance.

There are closing costs to consider. If it will only take a short while to make back the closing costs (in monthly savings), it’s worth it. If not, you may want to wait.

Do you Qualify?

Finally, figure out if you’d qualify for a lower/better rate or term. Is your credit in good standing? Is it better or worse than when you bought the home? Are your debts under control so your debt-to-income ratio is less than 43%?

If so, you likely qualify.

Should you Refinance?

Before you refinance, look at the big picture. Make sure you’ve waited enough time and then look at the financial aspect. If it makes sense to refinance, I have plenty of programs to help you reach your financial goals.