When refinancing a mortgage, as many as 30% of homeowner's cash out part or all of their home's equity. By investing in home improvements or paying off credit cards, this can be a smart. But, if you are borrowing more than 80% of your home's value, you will be hit with private mortgage insurance, costing you hundreds a year.
There is no such limit on the number of times you can go for home refinance loans. Most lenders prefer that you have no late payment for the past 12 months before you switch over to a new loan.
When lenders offer a "no-cost" loan, they may include a prepayment penalty to discourage you from refinancing within the first few years of the loan. Ask the lender offering a no-cost loan to explain all the fees and penalties before you agree to these terms.
If you plan on moving out of your existing home within the next few years, it may not be beneficial for you to refinance. Make sure you let your mortgage specialist know your future plans.
Lenders like pristine credit reports. If you have a bunch of open credit card accounts that you never use (and who doesn't?), consider closing them. It will boost your credit score and make you a much more attractive borrower to a lender. Then, a month after you've closed your accounts, go over your credit report with a fine-tooth comb. It should read that the accounts were closed at your request. (You don't want lenders to think someone cut you off and that you're a bad credit risk.)
