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6 min read May 24, 2023

When Can You Refinance Before Selling Your Home?

Refinancing before selling your home can be a strategic financial move, but it’s important to consider timing and various factors.

If you’re planning to sell your home soon, refinancing may not always be the best option due to closing costs and potential prepayment penalties.

However, if you have a longer timeframe, refinancing can help lower your monthly payments, improve your credit, or access equity to fund other ventures.

Reasons To Refinance

There are several reasons why homeowners choose to refinance their mortgages:

  1. Lowering interest rates: Refinancing allows homeowners to take advantage of lower interest rates, potentially reducing their monthly mortgage payments and saving money over the life of the loan.
  2. Shortening the loan term: Refinancing from a longer-term mortgage to a shorter one can help homeowners build equity faster and pay off their loans sooner.
  3. Changing from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage: Refinancing from an ARM to a fixed-rate mortgage provides stability and protection against future interest rate increases.
  4. Accessing equity: Homeowners can tap into their home’s equity through a cash-out refinance, allowing them to borrow against the value of their home for expenses like home improvements, debt consolidation, or other financial needs.
  5. Removing private mortgage insurance (PMI): Refinancing can be an option to eliminate PMI if the homeowner’s equity has increased significantly since they first obtained the loan.
  6. Consolidating debt: Refinancing can be a way to consolidate high-interest debt, such as credit card debt or personal loans, into a single, more manageable mortgage payment.
  7. Improving credit: By refinancing and making consistent mortgage payments, homeowners can demonstrate responsible credit management, potentially improving their credit score over time.

It’s important to carefully evaluate the costs, benefits, and long-term implications of refinancing before making a decision. Consulting with a mortgage professional can provide personalized guidance based on individual circumstances.

Can You Sell Your House After Refinancing?

Yes, you can sell your house after refinancing. Refinancing your mortgage does not impose any restrictions on your ability to sell the property.

However, it’s essential to consider the costs associated with refinancing, such as closing costs, prepayment penalties, and potential impacts on your equity. If you decide to sell shortly after refinancing, these costs may outweigh the benefits gained from refinancing.

It’s recommended to carefully evaluate your financial situation and consult with a real estate or mortgage professional before making any decisions.

How Soon Can I Sell My House After Refinancing?

There is no specific waiting period to sell your house after refinancing. You can sell it whenever you choose. However, it’s important to consider the costs associated with refinancing and the potential impact on your equity.

If you sell shortly after refinancing, you may not have recouped the costs, and your equity may be affected. It’s advisable to assess your financial situation and consult with professionals to make an informed decision.

How Long Does It Take To Break Even On A Refinance?

The time it takes to break even on a refinance depends on several factors, including the closing costs, interest rate reduction, and the monthly savings achieved.

Generally, it can take anywhere from 2 to 7 years to recoup the costs of refinancing through savings on monthly mortgage payments.

When Does It Make Sense To Sell After Refinancing?

It may make sense to sell after refinancing under various circumstances. Here are a few situations where selling after refinancing could be beneficial:

  1. Significant increase in home value: If your home’s value has substantially appreciated, selling after refinancing can allow you to capitalize on the increased equity and potentially make a profit.
  2. Change in personal circumstances: Life changes such as job relocation, downsizing, or upgrading to a larger home can prompt a decision to sell after refinancing.
  3. Financial goals: If selling aligns with your financial objectives, such as paying off debts, funding a new venture, or diversifying investments, it could be a strategic move.

Ultimately, the decision to sell should consider your individual circumstances, market conditions, and long-term financial goals. Consulting with a real estate professional can provide valuable insights to help you make an informed decision.

Can You Refinance If Your Home Is On The Market?

Yes, it is possible to refinance your home even if it is currently on the market. However, lenders may have specific guidelines or restrictions regarding refinancing a home that is listed for sale.

It’s important to communicate your intentions with both your real estate agent and potential lenders to ensure a smooth process and to understand any potential implications or limitations.

Alternatives To Refinancing

If refinancing is not the right option for you, there are several alternatives to consider:

  • Home equity loan: This involves taking out a loan using your home’s equity as collateral. It provides a lump sum of money that you can use for various purposes, such as home improvements or debt consolidation.
  • Home equity line of credit (HELOC): Similar to a home equity loan, a HELOC allows you to borrow against your home’s equity, but instead of a lump sum, you have access to a line of credit that you can draw from as needed.
  • Second mortgage: This involves obtaining a separate mortgage on your property, allowing you to access additional funds. It can be used for various purposes, similar to a home equity loan or HELOC.
  • Personal loan: If you don’t want to use your home as collateral, you can consider a personal loan. These loans are unsecured and can be used for a wide range of purposes, such as home renovations or debt consolidation. However, interest rates may be higher compared to mortgage-related options.
  • Negotiating with current lender: It’s worth exploring the possibility of negotiating with your current lender for better loan terms, such as a lower interest rate or modified repayment terms. This can help you achieve some of the goals that refinancing would have addressed.
  • Budgeting and saving: If your financial goals are more focused on reducing debt or improving cash flow, you may consider developing a budget and implementing savings strategies to meet your objectives without taking on additional debt.

It’s important to carefully assess the costs, terms, and potential risks associated with these alternatives before making a decision. Consulting with a financial advisor or mortgage professional can provide personalized guidance based on your specific circumstances.

Final Thoughts

When refinancing is not the ideal option, alternatives such as home equity loans, HELOCs, second mortgages, personal loans, negotiating with lenders, and budgeting/saving can offer viable alternatives to achieve your financial goals.

Consider the costs, terms, and risks associated with each alternative before making a decision.


1. Can I refinance my home if I plan to sell it soon?

Yes, you can refinance your home even if you plan to sell it in the near future. However, it's important to consider the costs associated with refinancing, such as closing costs and potential prepayment penalties, to ensure that the benefits of refinancing outweigh these expenses.

2. Will refinancing affect the sale of my home?

Refinancing itself does not directly impact the sale of your home. However, it's crucial to consider the potential impact on your equity and the costs involved. If you sell shortly after refinancing, you may not have fully recouped the refinancing costs, which could affect your overall profit from the sale.

3. Can refinancing help me sell my home faster?

Refinancing alone may not directly influence the speed at which you sell your home. However, refinancing can provide financial benefits such as lower monthly payments, improved credit, or access to funds for necessary repairs or renovations, which may make your home more appealing to potential buyers and potentially facilitate a quicker sale.


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