As 2026 approaches, homeowners who locked in higher mortgage rates over the last several years might wonder if the new year will finally be the time to refinance their home loans. With inflation continuing its gradual cooldown, mortgage rates ticking lower, and several closely watched Fed meetings scheduled for the end of 2025 and the beginning of 2026, there’s much to keep your eye on. If you’re among the refinance hopefuls, here’s what it all means and might mean for you.

MORE: See our picks for the best mortgage refinance lenders.

First of all, mortgage rates remain more closely tied to movements in the bond market than the Federal Reserve’s benchmark interest rate. However, that doesn’t mean Fed policy doesn’t play an indirect role in shaping expectations.

The Federal Open Market Committee (FOMC) is scheduled to meet Dec. 9-10, 2025, followed by additional meetings in 2026 scheduled for Jan. 27-28 and March 17-18. These meetings matter because mortgage rates often adjust in anticipation of what the Fed might do (keep rates steady or make cuts) even more than they react to what the Fed actually announces regarding policy decisions in the meeting.

Some things to keep an eye on in late 2025-26 if you’re interested in refinancing: inflation readings, employment figures, and broader financial market stability. All of these contribute to where mortgage rates might head next.

Heading into 2026, the market is watching whether inflation will remain near the Fed’s 2% target. As of September, the last time the government calculated the Consumer Price Index (CPI), the nation’s annual inflation rate was 3%. If inflation continues to ease, bond yields could also cool off, creating an environment favorable to lower mortgage rates.

Even small rate dips could make refinancing attractive for borrowers who bought between 2022 and 2024. That said, many homeowners still face affordability constraints, especially if their equity hasn’t increased enough to meet lender requirements or if closing costs on a refinance pose a significant financial hurdle.

So, is 2026 your year to refinance your mortgage? It very well could be, and the best advice out there is to close out 2025 with a clear understanding of your financial baseline, according to David Askew, managing director and senior wealth advisor at Mercer Advisors.

“First, evaluate the impact of the interest rate change on your monthly cash flow,” Askew said via email. Even a slight reduction can help ease a tight household budget. But before signing on the dotted line, it’s important to confirm that the refi savings add up to justify the effort.

Askew said a homeowner who took out a 30-year fixed-rate mortgage for $500,000 in 2022 at 7% could see meaningful savings even with a modest rate drop. If rates drop to 5.75% in 2026 after only 48 months of payments, refinancing could bring their monthly payment down from $3,327 to $2,786, freeing up nearly $550 in the borrower’s monthly budget.

Use the monthly mortgage payment calculator below to see how different mortgage rates and terms would affect your monthly payment should you refinance.

Additionally, you must account for closing costs in the refinance, which typically range from 2% to 6% of the total loan amount. In this case, the borrower refinanced $477,373 of the original $500,000, adding closing costs of roughly $9,547 to $28,642.

Ask yourself: Does it make sense to pay these costs or stick with my current, albeit higher, mortgage rate?

If you plan on staying in your home for the long haul, refinancing usually makes sense. You’ll save thousands in interest costs over the life of your mortgage loan. If you can roll closing costs into your loan, you have less out-of-pocket stress, but it’s also a move that could increase your monthly payment and interest paid over time.

However, if you plan to stay in your home for a shorter term, the math becomes even more important in determining whether it makes sense to refinance your mortgage. Gary Schlossberg, a global strategist with Wells Fargo Investment Institute, noted in an email interview that while homeowner tenure varies by region, most homeowners stay in place for roughly 12 years on average. Those expecting to relocate well before that may struggle to reach their break-even point.

The break-even point on a mortgage refinance is the time it takes to regain the cost of refinancing. You can calculate your breakeven point using a simple formula:

Total refinance costs / monthly savings = refinance break-even point (in months)

Using that same $500,000 mortgage example from above, say your refinancing costs total 2% of your loan balance, or $9,547, and your monthly savings are $550. Your break-even point is just over 17 months away. However, if your closing costs total 6% of your loan, or $28,642, your break-even point extends to 52 months – nearly triple that of the refinance with lower costs.

Before deciding whether to refinance your home in 2026, consider that your emergency savings play a significant role in this conversation. Borrowers without adequate savings should think carefully before moving forward with a refi if doing so would wipe out the cash they rely on for unexpected expenses or job instability.

Experts say that three to six months' worth of expenses in savings is a good target for an emergency fund. If refinancing would tap into this cash, evaluate how long it would take you to rebuild up to a level you’re comfortable with. Every month that your savings fall below your ideal target leaves you increasingly exposed to life’s uncertainties.

Discover whether now is a good time to refinance your mortgage.

Gather your most recent mortgage statement and note your balance, interest rate, remaining term, and whether you’re paying mortgage insurance. This gives you the baseline you’ll use to compare refinance offers.

Rates and closing costs vary widely, even on the same day. Ask at least three lenders for a written mortgage Loan Estimate so you can compare interest rates, fees, and projected monthly payments side by side.

Divide your total closing costs by your estimated monthly savings to calculate how long it will take to recoup the up-front expense. If you don’t expect to stay in the home past that point, refinancing might not be the best move.

Consider whether you want to keep the same term, shorten it, or extend it. A shorter-term loan, such as a 15-year fixed-rate mortgage, can save you on interest but may increase your monthly payment. Extending the term lowers your payment but increases long-term interest — a trade-off some borrowers are comfortable making if cash flow is tight.

15-year vs. 30-year mortgage: How to decide which is better

With major Fed meetings scheduled for December 2025 and January 2026, markets could shift quickly. Ask each lender how long their mortgage rate locks last, whether extensions or rate float-downs are available, and how pricing changes if you need additional time to close.

Look at the total cost over time, not just the monthly payment. If you’re switching terms or rolling closing costs into the loan with a no-closing-cost refinance, the long-term numbers can look very different and should align with your broader financial goals.

Once you’ve determined that refinancing makes financial sense, it’s worth thinking about how the new loan fits into your bigger financial picture. For some borrowers, a lower monthly payment frees up room to pay down high-interest credit cards, auto loans, or student debt — a shift that may offer more meaningful long-term savings than the refinance alone.

Homeowners should also consider how a refinance affects their future flexibility. A lower monthly mortgage payment can make it easier to weather income changes, job transitions, or unexpected expenses. For homeowners who expect to stay in their property for a long time, locking in a stable payment with a fixed-rate loan compared to an adjustable-rate mortgage can also add predictability to their financial plans.

Finally, refinancing doesn’t have to be a one-and-done decision. If rates fall further later in 2026, you can run the numbers again and refinance a second time, as long as the savings outweigh the closing costs and align with your long-term goals.

Learn how to pay off debts by refinancing your mortgage.

Refinancing your mortgage can be a smart move, but only if it genuinely improves your financial picture. The biggest question is whether the new interest rate and payment help your overall financial picture — not just on paper, but in your actual monthly budget. Homeowners often refinance to lower their payments, shorten their loan term, or tap into equity with a cash-out refinance, but the long-term savings must outweigh the closing costs. It also matters how long you plan to stay in the home. For some borrowers, a refi can free up cash flow and reduce stress. For others, it may not pencil out.

Predicting rates is tricky, but most economists expect any mortgage rate decreases in 2026 to be gradual rather than dramatic. Much of it depends on where inflation settles and how the bond market responds to the Fed’s early-year decisions. If price pressures continue to ease and investor confidence stabilizes, rates could drift lower from today’s levels, but probably not back to the ultra-low levels of the early 2020s. Homeowners who locked in rates above 7% when they bought their houses may still see meaningful opportunities next year, even if the rate drop in 2026 isn’t massive.

It’s understandable to hope for a return to the ultra-low mortgage rates we saw in 2020 and 2021, but most economists say those days are likely behind us for now. Rates that low were the result of an extraordinary mix of pandemic-era stimulus, economic uncertainty, and aggressive Fed intervention — conditions that aren’t expected to repeat anytime soon. Could rates drift lower from where they are today? Absolutely. But mortgage rates dropping below 4% again would require a major (and not necessarily favorable) economic shift, and experts generally aren’t predicting that in the foreseeable future.

Laura Grace Tarpley edited this article.

Getting cash from the equity in your home may seem like a dream come true. You probably thought you wouldn't see that money until you sold your home. But a cash-out refinance does just that: By replacing your existing mortgage, you can draw a lump sum from the value accrued in your home. Here are the leading cash-out refinance mortgage lenders to choose from.

Why Truist Bank mortgage refinancing stands out: Truist is a mortgage provider that leaves little to be desired. It offers numerous cash-out refinance options and lower-than-median loan costs.

Availability: 17 states and Washington, D.C.

Types of cash-out refinancing: Conventional, FHA, VA, and jumbo.

Minimum credit scores: 620

Truist refinancing mortgage rate estimates can be adjusted by one, or zero, discount points — one of our favorite tool options.

The lender offers cash-out refinancing on conventional, VA, FHA, and jumbo loans.

Mortgage rate locks for refinancing are available for up to 90 days.

Cons

Truist ranks near the bottom of the 2025 J.D. Power customer satisfaction survey for mortgage originators.

The lender only offers mortgages in 17 U.S. states and Washington, D.C.

Why Bank of America mortgage refinancing stands out: Bank of America does big business in conventional loans. It also offers a unique tool to help you get started with a cash-out refinance: a market estimate that tells you how much your home may be worth.

Availability: All 50 states and Washington, D.C.

Types of cash-out refinancing: Conventional, FHA, VA, and jumbo

Minimum credit scores: "We don’t publish minimum credit scores," a Bank of America representative told Yahoo Finance via email

Bank of America has a very useful home value estimator, which is a good first step in exploring a cash-out refinance loan.

Existing customers may qualify for interest rate reductions or a lower origination fee.

BofA offered lower-than-median interest rates to borrowers in 2024, according to Home Mortgage Disclosure Act data.

The lender ranks high in customer satisfaction, according to J.D. Power.

Bank of America only offered borrowers average loan costs in 2024.

Learn when you should refinance with the same mortgage lender.

Why Citi Mortgage refinancing stands out: Citi Mortgage has a proven track record of refinancing loans with median amounts in the seven-figure range. That puts them in the sweet spot for jumbo loan cash-out refinancing.

Availability: All 50 states and Washington, D.C.

Types of cash-out refinancing: Conventional, FHA, VA, and jumbo

Minimum credit scores: A Citi representative told Yahoo Finance that the lender doesn’t provide minimum credit scores

With a median loan refinance amount exceeding $1 million in 2024, Citi is well-positioned (and apparently very willing) to tackle jumbo refinancing.

The Citi mortgage refinancing guide walks you through six steps of the loan process and includes relevant calculators.

New and existing Citibank customers may qualify for interest rate discounts or a closing cost credit on a cash-out refinance.

Citi ranks number one for customer satisfaction among mortgage originators, according to J.D. Power.

Loan costs were higher than the national median in 2024.

Why Pennymac mortgage refinancing stands out: Pennymac is a top-five VA lender by volume in the U.S., so it is a go-to resource for a VA cash-out refinance.

Availability: All 50 states and Washington, D.C.

Types of cash-out refinancing: Conventional, FHA, VA, and jumbo

Minimum credit scores: 620 for conventional, 580 for FHA and and VA loans

A home value tool allows you to put in an address, get an estimated price per square foot, and explore sales of comparable homes in your neighborhood.

Even if the VA does not back your original mortgage, you may still qualify for a VA cash-out refinance if you have service-related eligibility.

Pennymac offered below-median mortgage rates to borrowers in 2024.

Pennymac offered loan costs significantly higher than the median in 2024.

Why AmeriHome mortgage refinancing stands out: AmeriHome is a top-10 FHA lender by volume and offers cash-out refinancing specifically for FHA mortgages.

Availability: Originates loans in 47 states and Washington, D.C. (excluding Massachusetts, Nevada, and New York)

Types of cash-out refinancing: Conventional, FHA, VA, and jumbo

Minimum credit scores: AmeriHome's website does not provide minimum required credit scores, and a request from Yahoo Finance was not answered by the time of publication

A refinance break-even calculator helps you determine how many months it will take to cover the costs of the refi.

AmeriHome accepts alternative credit data for borrowers who lack a traditional credit history or a consistent income. That can include using bank statements and assets to qualify.

A "free instant rate quote" requires contact by email or phone from AmeriHome, third parties, or artificial intelligence.

Doesn't originate mortgages in Massachusetts, Nevada, or New York.

Why Rocket Mortgage refinancing stands out: Rocket Mortgage is the largest retail mortgage lender in the nation. More importantly, it offers flexibility in refinancing mortgages for those with less-than-perfect credit scores.

Availability: All 50 states and Washington, D.C.

Types of cash-out refinancing: Conventional, FHA, VA, and jumbo

Minimum credit scores: 620 for conventional, 580 for FHA, and 580 for VA loans

You can qualify for a cash-out refi with a credit score as low as 580. However, if you have a conventional rather than a government-backed loan, the minimum credit score required is 620.

Rocket Mortgage says you'll get loan options in as little as five minutes with no hit to your credit score.

A home equity calculator will help you decide if a cash-out refinance will work for you.

For years, Rocket topped the J.D. Power customer satisfaction survey. Today, it is barely above the study average.

Read our complete Rocket Mortgage review.

Cash-out refinancing rolls your home equity into a new loan. You can use that money to pay off high-interest credit cards, make home improvements, or anything else. The cash you take out is added back to your loan with new terms and a new mortgage interest rate.

So, yes, you receive a substantial check for the value locked up in the walls of your home, but you're paying interest on that money as part of the additional debt you incur.

To get a cash-out refinance:

You will need an appraisal of your home's current market value.

Then, determine the loan-to-value ratio (LTV) that the lender will require.

The lender will submit the loan to typical credit qualifications (your credit score, debt-to-income ratio, etc.) during the underwriting process.

You close on the loan and get your check.

The cash you receive is based on a loan-to-value (LTV) ratio. Often, that's up to a maximum of 80%, although the percentage varies depending on the type of loan. Here's how that's calculated.

Say you have a home with a market value of $ 350,000 and a mortgage balance of $250,000. The market value is multiplied by 80%. The mortgage balance is then subtracted to determine that you can access $30,000 of your home's equity.

350,000 X 0.80 = 280,000

280,000 - 250,000 = 30,000

Government loans can have different qualifications and guidelines.

VA loans for borrowers with a military connection may allow up to 90% LTV (sometimes even 100%).

VA loans have one-time funding fees.

FHA loans typically have more lenient credit score requirements.

FHA loans require up-front and ongoing mortgage insurance premiums (MIPs).

USDA loans do not allow cash-out refinancing.

When choosing the best mortgage lender for a cash-out refinance, you may be thinking of one thing: getting the big check. However, the most effective way to manage debt generally boils down to the interest rate you earn and the fees you pay.

You might be surprised by just how much loan offers can vary from lender to lender. One mortgage lender might offer you a super low rate — but then hit you with hefty fees. You need to find the right balance: a fair rate and reasonable fees.

That's the power of comparison shopping among lenders. When you get preapproved for a mortgage, you'll be able to put loan offers side by side to determine which lender is giving you the best overall deal. Sure, it's a pain. Yes, it takes time. And most people are just happy to get a one-and-done loan offer.

But they're the ones who don't realize how much they could have saved over the long term with a better interest rate and lower fees. You do. And you'll still get the big check.

Follow these 8 strategies to get the lowest interest rate on a mortgage.

Instead of a new mortgage, you might consider a second mortgage. That's what home equity loans and lines of credit are. You keep your current mortgage and add another home loan — and another monthly payment.

Home equity loans give you a lump-sum payment of equity. If you have a great interest rate on your primary mortgage, a HEL gives you the same lump sum access as a cash-out refi, without giving up your low mortgage rate.

HELOCs allow you to withdraw equity over time and pay interest only on the amount borrowed. Again, with a HELOC, just as with the HEL, you keep your primary mortgage rate instead of trading in your existing mortgage for a new cash-out refinance loan.

Some HELOC lenders will allow you to take a sizeable sum at initiation, but the draw-cash-as-you-need-it HELOC can reduce your interest costs.

Learn more and compare:

Cash-out refinance vs. HELOC

Cash-out refinance vs. home equity loan

Banks can have a lot of flexibility when it comes to cash-out refinancing because they want to expand their relationships with customers. So, your current bank could be the best bank for a cash-out refinance. As an existing client, you may receive fee discounts or interest rate breaks. It's always a good idea to shop for different types of lenders, though. Consider a bank, a credit union, and a retail mortgage lender to find which one offers you the best terms.

Cash-out refinance mortgage rates vary daily. As of late November 2025, the 30-year fixed refinance rate was 6.18%, according to Zillow. That's for a regular refinance, not a cash-out. It is essential to note that cash-out refinance rates are typically slightly higher than traditional refinance rates. That's because lenders believe a homeowner tapping the equity in their home and adding that sum to a new loan carries more risk than a borrower who has paid down a chunk of principal. Refi rates also vary by location and your creditworthiness.

Not necessarily. It is, after all, just another mortgage. The usual credit parameters come into play: your debt-to-income ratio, credit score, and payment history. Obviously, you'll also need to have some equity in your home. The amount required varies by the type of loan, but a minimum of 20% is a common guideline.

You’ll typically need a minimum 620 credit score for a conventional cash-out refinance, but government home loans (like FHA loans) have more lenient requirements.

Yahoo Finance reviews mortgage lenders based on five primary considerations: 1) Interest rates. Using 2024 Home Mortgage Disclosure Act data from almost 5,000 mortgage companies, we analyze mortgage lenders based on issued mortgage rates below or above the annual median of reporting lenders. 2) Affordability. A measure of loan product availability and the willingness of a lender to offer government-backed loans, low down payments, down payment assistance, and consideration of nontraditional credit. 3) Loan costs. HMDA data is again analyzed, and total loan costs are compared to the annual median. 4) Rate transparency. The ability of a website user to obtain a mortgage interest rate estimate. We also consider whether rates are enhanced with discount points or high credit score requirements, disclaimers revealing rate assumptions, sample advertised rates, and whether adjustable or no discount point rate estimates are available. 5) Online features. An analysis of the educational material, calculators, and additional resources available to users.

Advertisers or sponsorships do not influence ratings.

Editorial disclosure for mortgages:

The information in this article has not been reviewed or approved by any advertiser. The details on financial products, including interest rates and fees, are accurate as of the publish date. All products or services are presented without warranty. Check the lender's website for the most current information. This site doesn't include all currently available offers.

Laura Grace Tarpley edited this article.

Refinancing your mortgage can help you achieve a variety of goals, such as lowering your monthly payment, paying off your loan early, taking out cash, or getting rid of mortgage insurance. Here are seven types of mortgage refinance options you can choose from — and what each one means for your finances.

Read more: 6 times when it's a good idea to refinance your mortgage

Here is a basic run-down of the types of mortgage refinances you can choose from. Do a couple look like they would benefit you? We dive deeper into each option below.

A rate-and-term refinance changes your interest rate, term length, loan type, or some combination of these three. It’s what you might think of as a “traditional” refinance.

These are usually a good option if refinance rates are lower than the rate on your existing mortgage or if you want to choose a shorter or longer loan term. For instance, if you needed a lower payment, you might refinance your current loan into a new 30-year one. This would spread your payments out over more months and lower your monthly payments. (Refinancing into a shorter-term loan, like a 15-year one, would do the opposite — raising your payment but helping you pay off your loan sooner and with less interest.)

You also might consider a rate-and-term refinance to change loan types. If you have an adjustable-rate mortgage, for example, you may use this type of refinance to replace that with a fixed-rate mortgage, which has a set interest rate and payment for life. You could also refinance from an FHA loan — which comes with FHA mortgage insurance premiums — into another loan that doesn’t.

Dig deeper: The best mortgage refinance lenders

You’d use a cash-out refinance if you want to tap your home equity. With this option, you’ll take out a loan that’s larger than your current mortgage balance, use it to pay off your old loan, and get the difference in cash. You can then use the money however you’d like (though most use it for home improvements or consolidating debts).

You can get a cash-out refinance with most loan types, including FHA, VA, and conventional loans.

Learn more:

FHA cash-out refinance

VA cash-out refinance

Streamline refinances are an option when you want to refinance into the same loan type as before — from an old FHA loan to a new one, for example. The process for streamline refinances is intended to be faster and easier than with full refinances, and you usually won’t need a credit check or appraisal, which can reduce your closing costs.

Streamline refinances are available on FHA, USDA, and VA loans (although VA loan streamline refinances are called IRRRLs — Interest Rate Reduction Refinance Loans).

Read more:

FHA Streamline Refinance

VA streamline refinance (IRRRL)

USDA streamlined refinance

Some lenders offer “no-closing-cost” refinances, which, as the name implies, require no up-front closing costs. These can save you on out-of-pocket cash initially, but you’ll still end up paying the closing costs in other ways. In most cases, your closing costs get rolled into your loan balance, resulting in a larger loan amount, higher monthly payments, and more long-term interest costs.

Sometimes, lenders will actually cover the closing costs for you, but they’ll charge you a higher interest rate instead. Either way, it’s important to run the numbers to determine if this type of mortgage refinance is right for you — especially if it results in more interest paid over the long haul.

Learn more: How to get a low-cost refinance on your mortgage

A cash-in refinance is a lesser-known option for homeowners looking to lower their rate and payment or, in many cases, pay off their loan sooner. Think of it as the opposite of a cash-out refinance. A cash-out refi involves taking out a larger loan and receiving the difference in cash. With a cash-in refi, you refinance into a new loan that’s smaller than your current balance, making a large lump sum payment to do so.

This smaller balance can often help you snag a lower refinance rate, and depending on the term you choose, it could lower your monthly payment too. You could also use this refinance option to speed up your mortgage payoff. In this scenario, you might refinance into a shorter loan term — along with putting cash in — to pay off your mortgage loan sooner.

Cash-in refinances can be something to consider if you come into an unexpected financial windfall, like an inheritance.

Read more: Want to refinance your home loan before the end of 2025? What to know.

You might consider this type of refinance if you’re underwater on your mortgage, meaning you owe more on your mortgage loan than your home is currently worth.

With a short refinance, your lender agrees to let you refinance your current loan into a smaller one — more in line with your home’s current value. This would lower your monthly payment and, ideally, make covering your monthly payments easier.

Short refinances usually result in a financial loss to the lender, but they may cost less than pursuing foreclosure, which can take months or even years to finalize. Talk to your lender if this type of refinance is something you’re considering.

A reverse mortgage isn’t technically a type of refinance, but it is an option if you need to take cash out of your home.

There are government-backed reverse mortgages — called Home Equity Conversion Mortgages (HECMs), which are for homeowners ages 62 and up, and there are reverse mortgages from private lenders. These sometimes allow borrowers to be as young as 55.

With reverse mortgages, you turn your home equity into cash. Your lender will either give you a lump-sum payment, send you regular monthly payments, extend you a credit line, or some combination of these options. In the meantime, you won’t make any payments. Instead, the reverse mortgage gets repaid when you pass away, sell the home, or move permanently off the property (into an assisted living facility, for instance).

The best mortgage refinance option is going to vary from homeowner to homeowner.

To choose the right strategy for you, you’ll want to take the following factors into account:

Your financial goals: What are you trying to achieve with your refinance? A lower rate or payment? A quicker payoff timeline? Cash for home repairs? Your end goal can point you toward the right type of refinance for your situation.

Your budget: Refinancing costs can vary widely depending on the type of refi you utilize — from absolutely no fees to tens of thousands of dollars in the case of cash-in refinances. Determine what cash you have for the up-front costs of refinancing, and use that to zero in on which options might be best for that budget.

The type of mortgage you currently have: Your current mortgage type will determine what refinancing options you have. If you have an FHA loan, for example, you’ll have a streamline refinance option at your disposal. The outstanding balance on your mortgage also plays a role (particularly in the case of cash-out refinances.)

Market conditions: Current interest rates and home prices should also factor into your decision. If rates have risen since you initially took out your loan, a rate-and-term refinance likely won’t be ideal. The same goes for home prices. If your home’s value has dropped, you may not have much equity, meaning a cash-out refinance isn’t an option.

If you’re not sure which refinancing option is right for you, talk to a mortgage professional or financial advisor. They can help you make the right choice for your financial goals and budget. You might also consider working with a mortgage broker. These are experts who can help you compare lenders and loan options to ensure you get the best deal.

Read more: How often can you refinance your home?

Rate-and-term refinances are the most common type of refinance. These allow you to replace your old loan with a new one that has a different rate, term length, or loan type.

There are six types of mortgage refinance options: rate-and-term, cash-out, streamline, no-closing-cost, cash-in, and short refinances. A reverse mortgage is a sort of seventh type — it isn’t technically a refinance, but it offers a way to tap into your home equity and receive cash. The right choice depends on your financial goals and budget.

The alternatives to refinancing your mortgage depend on what your goals are. If you’re looking to pay off your loan sooner, you can simply make extra payments toward your principal balance or opt for biweekly mortgage payments instead of monthly ones. You can ask your lender about a loan modification or recast if you want a lower rate or payment. If you’re hoping to tap your home equity, you can look into second mortgages, like home equity loans and HELOCs.

Refinancing can often be a good idea if you need to lower your interest rate or monthly payment, pay off your loan sooner, eliminate mortgage insurance, or turn your home equity into cash. It depends on many factors, though, including your financial goals, your budget, current market conditions, and more. Talk to a mortgage professional if you’re not sure refinancing is right for you.

There are many refinance options to choose from. The most common is the rate-and-term refinance, which replaces your current mortgage with a new one — complete with a new term or interest rate. There are also cash-out refinances, cash-in refinances, short refinances, streamline refinances, and no-closing-cost refinances.

Laura Grace Tarpley edited this article.

If you recently got a mortgage but aren’t satisfied with the interest rate or terms, you’re probably wondering if you can refinance it right away. The short answer is: It depends. In some cases, you may be able to refinance immediately. But depending on the type of mortgage loan and your lender’s requirements, it could also take six months or longer.

Refinancing your mortgage could potentially save you a good chunk of change over the life of the loan. However, not every mortgage lender or type of loan allows you to refinance immediately; some may enforce a waiting period. So, how soon can you refinance a home mortgage? Here’s what you can expect:

Conforming loan refinance (no cash out): Lender-dependent, but anywhere from immediately to one year from the original loan date

Jumbo loan refinance (no cash out): Varies by lender

Cash-out refinance (conforming, jumbo, FHA): 12-month waiting period

Cash-out refinance (VA): 210-day waiting period

FHA or VA Streamline Refinance: 210-day waiting period

USDA loan refinance: From 6 months to 12 months, depending on refinance type

Some mortgage lenders will have their own requirements for how soon you can refinance your mortgage after buying the home, but these are the rules of thumb.

Read more: Should you refinance your mortgage with the same lender?

There’s no limit on how often you can refinance your mortgage after your most recent refinance, as long as it makes financial sense for you. However, depending on the lender and the type of mortgage loan, the waiting periods mentioned above can still dictate how soon you can refinance again.

For example, you can typically refinance a conventional loan whenever you want after your most recent refinance, provided that you meet the lender’s requirements. However, you may have to wait up to 12 months if you want a cash-out refinance rather than a traditional refinance.

Also, you can refinance an FHA or VA loan after 210 days, but depending on the circumstances, you may have to wait 12 months to refinance a USDA loan again.

Depending on your financial goals and the type of mortgage loan, you can refinance your loan in various ways. But before you start the process, make sure you understand the rules associated with each.

When you take out a rate-and-term refinance on a conforming loan — a conventional mortgage with terms and conditions that meet Fannie Mae's and Freddie Mac's funding criteria — you pay off your existing conforming loan and replace it with a new one.

As mentioned above, there is no legal minimum timeframe between closing on your last conforming mortgage and refinancing into a new loan. However, some lenders impose a six-month or even one-year waiting period before you can refinance after taking out a mortgage with them. In this case, you could get around this rule by choosing a different mortgage refinance lender.

Jumbo loans are another type of conventional loan, but they’re non-conforming loans, which means they exceed Fannie Mae and Freddie Mac’s conforming loan borrowing limits and are not backed by any government agencies.

Though jumbo loan lenders may not require a waiting period, they might be pickier about who they approve for refinancing since these loans are much riskier than conforming ones.

With a cash-out refinance, you tap into your home equity by taking out a new mortgage for more than you owe on the first one and receive the difference in cash. You typically need to wait at least six to 12 months (depending on the mortgage type and lender) and have built 20% equity in your home before you can do a cash-out refinance.

To qualify for both the FHA Simple Refinance and the FHA Streamline Refinance program, you must already have made at least six payments on your existing FHA loan. Your loan must be in good standing, and at least 210 days must have passed since the closing date.

The difference between these two programs is that the FHA Streamline Refinance program requires that borrowers receive a “net tangible benefit” from refinancing. That “benefit” usually translates to either a lower interest rate or monthly payment. There’s no “net tangible benefit” requirement for an FHA Simple Refinance.

The VA Interest Rate Reduction Refinance Loan (IRRRL) program, also known as a VA streamline refinance, allows you to refinance your existing VA loan as long as it helps you financially, like locking in a lower interest rate. To qualify, you’ll have to wait until 210 days after making your first payment on your existing mortgage.

If you want to qualify for the USDA streamlined refinance program, your mortgage must be current with on-time payments for the past 12 months, which means you can't refinance a USDA loan unless a year has passed since closing. Also, your new monthly mortgage payment must be at least $50 lower after the refinance for you to be approved.

If you’re looking at a non-streamlined USDA refinance (the phrase used for a USDA rate-and-term refi), you’ll need to show a minimum of six months of on-time payments and wait 180 days from your original USDA loan closing date.

Refinancing your mortgage may not always be the smartest move, especially if the costs outweigh the benefits. But here are a few scenarios when it makes sense to refinance your mortgage:

Your home value has gone up. If you need cash to pay for big-ticket items and your home value has increased since you first took out your original loan, a cash-out refinance can make financial sense if you get a better interest rate on the new loan.

You want to convert to a fixed-rate mortgage. Refinancing into a fixed-rate mortgage could offer some peace of mind if you have an adjustable-rate mortgage but are worried about future interest hikes.

Your credit score has improved. Typically, the better your credit score, the better mortgage rates you can qualify for. Use the myFICO Loan Savings Calculator to see how much you could save by refinancing your mortgage with a higher FICO score.

Mortgage rates have gone down. If current rates are lower than when you bought your home, a mortgage refinance could save you money on interest and lower your monthly payments. No matter the latest rates, though, always check that the math works out in your favor using a mortgage calculator.

You want a shorter loan term. Refinancing to a shorter loan term can be a solid idea if you want to pay off your mortgage faster. But remember, shorter loan terms mean higher monthly payments, so make sure you can afford them.

You can get rid of private mortgage insurance. You may be paying for PMI if you put less than 20% down on your original mortgage. Refinancing is just one way to get rid of PMI and lower your monthly payments.

Dig deeper: Is now a good time to refinance your mortgage?

While some lenders let you do a rate-and-term refinance immediately, it’s more common for lenders to refinance a mortgage after you’ve had the loan for six to 12 months. If you’re looking to do a cash-out refinance, you’ll need to wait six to 12 months and have at least 20% equity in your home.

For a VA IRRRL (aka Streamline Refinance) or VA cash-out refinance, you’ll need to wait at least 210 days since you closed on your original loan.

To do a cash-out refinance, you’ll typically need at least 20% equity in your home. However, if you’re just doing a rate-and-term refinance and aren’t looking to take money out, you generally won’t need to meet strict equity requirements.

This article was edited by Laura Grace Tarpley