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There’s a phrase that has the ability to make almost any finance expert cringe, even as it brings a sense of comfort to those who are just about to buy a home: “I can always refinance.” And while it’s true that many homeowners can benefit from refinancing their mortgage, it isn’t necessarily always an option if you want to save money.

Here are three times when refinancing might not be right for you.

1. Current rates aren’t significantly lower than your current rate

As of writing, starting refinancing mortgage rates on 30-year loans for those with good credit range from 5.742% APR to 7.318% APR.

As a general rule, if the rates available to you aren’t at least 1% lower than your current rate, refinancing might not be worth it. Applying for a refinance means an inquiry to your credit history, which can lower your score. It also might not deliver on the savings you’re looking for given the costs associated with refinancing, such as origination and home appraisal fees.

If your current mortgage rate is at least 8.318%, refinancing might be a good idea. In that case, explore your options by checking out our list of top refinancing mortgage lenders.

2. It’s too soon to refinance

Depending on the type of mortgage you have, there may be time-based requirements that dictate when you’re eligible to refinance.

For example, conventional mortgages from Fannie Mae typically require you to own the title to your home for at least six months before you can use a cash-out refinance loan. And FHA loans bump that requirement up to a full year, plus you have to have 12 months of on-time payments to be eligible for a 95% cash-out refinance loan. So it pays to read the fine print here.

If you’re interested in refinancing but you bought your home within the last year, be sure to double-check the terms of your mortgage to make sure you’re eligible. If not, it’s a good time to focus on boosting your credit so you can qualify for the best rates once you can refinance.

3. Your credit doesn’t yet meet refinancing requirements

Refinancing is all about the timing — and that means your credit has to be in good shape when the rates make sense for you to refinance. For conventional loans, you’ll want a score of at least 620 to qualify. Credit score requirements vary by lender; while some lenders will accept scores as low as 580, others will have higher score requirements.

Regardless, the higher your score, the better your chances of securing a lower rate. So working to increase it is in your best interest. A few ways to do this include:

• Paying down your revolving debt, such as that from credit cards.
• Signing up for auto-pay on bills to prevent late payments.
• Avoiding taking out new forms of credit, like loans, unless you really need them.
• Getting copies of your credit reports and ensuring they don’t have errors that could be dragging down your credit score.

Increasing your score can take time, so patience is key here.

Refinancing can make sense for many homeowners who are looking for ways to save money on their home purchase. But it isn’t right for everyone, nor is it an option for everyone.

By understanding these situations, you’ll be able to recognize when the timing is right. That way, you can take advantage of the benefits of refinancing.

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