This is an interesting question in this market. The reason I say that is because the downpayment requirements and loan programs available today are so consistent from one lender to another, that incurring a refinance cost immediately after buying a home is usually not a prudent investment of your capital. If you insist on refinancing then here are some guidelines to think about.
The first is that for 99.99% of the lenders in business today will only allow you to use the lessor of the Sales Price or Appraised Value for the first 12 months after the purchase.
If you had a single loan and made a down payment then you used to be able to get a HELOC or 2nd mortgage up to the limits if those programs, but the loan limits in this market are below the Maximums for 1st mortgages. In theory you could get a new first mortgage up to the maximum LTV you qualify for, but the loan fees, and Mortgage insurance will likely erase any gains in (a lower)rate you could achieve.
So more than likely 12 months will be the best bet for you financially, and if you look at the market and what people are guessing at, probably 18-24 months might serve you better in terms of loan pricing based on Loan to Value Ratios.
I hope that helps!
Agreed, but there are some situations where it has made sense, most particularly with a new home.
Builders usually use heavy persuasion to use their mortgage company, and let’s face it, they are not the most competitive rates. Also, the builder’s mortgage company has to use the sales price or the appraised value, whichever is higher. In the past, it was quite common to have additional equity before even moving in. What we did in this situation is lock the buyer in under a long term lock (and had a float down option) and took his application before he owned the home. (Sounds crazy, but it can be done). The loan would be approved subject to the first settlement occurring as presented. After the purchase was recorded, we would re-close the purchaser with a lower rate and very little in closing costs…..everything was still current and the refunds from the first closing would be heavy (escrows, interest). Keep in mind, compliance required us to be able to show a benefit to the borrower (which was really not hard to do at all).
So, to answer your question, some lenders have no requirements and every transaction needs to be individually assessed.
(oh and those builder mortgage companies…they really didn’t like us because of the penalties they had to pay for a loan paying off so quickly)