Posted in: Getting a mortgage, Homeowner tips

What is "serial refinancing?"

What is serial refinancing

As loan rates hold strong at historically low rates, a new trend among homeowners is to refinance more than one time; homeowners who refinance multiple times are sometimes called "serial refinancers."

Refinancing provides homeowners with a lower interest rate and, thereby, a lower monthly mortgage payment. Serial refinancers can reap the greatest financial benefits by taking advantage of the market at the right time – several times in a row. As loan rates have remained low during the market correction, The Wall Street Journal reports that nearly 2.2 million homeowners have refinanced their mortgage loan twice since 2009. 

In the past, the cost to refinance often outweighed the overall financial benefit. During the housing boom, homeowners faced steep closing costs and additional penalties when refinancing, so loan rates had to decrease by nearly two percent in some cases for homeowners to benefit long-term. These days, lenders are waiving or reducing the closing cost fees and raising interest rates slightly to make up for that loss of payment. The result is a mutually beneficial relationship - homeowners are refinancing in droves, and they're still seeing significant cuts in their mortgage payments due to today's extremely low rates.

Wondering if it's time for you to refinance? First, ensure your financial situation is under control and that your credit score has either improved or stayed the same since your last refinance. This will not only provide you the best rate possible, but lenders may offer better terms for those who have a good payment history. If you owe more on your home than it is currently worth, try qualifying with the government's Home Affordable Refinance Program (HARP).

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