What is loan seasoning?

Loan seasoning refers to the period a borrower has held a mortgage before refinancing or selling the property. This concept is important in the lending industry because the length of time a borrower has been making payments can impact their creditworthiness and the lender's risk assessment.

When a loan is seasoned, it suggests that the borrower has a history of making consistent payments, indicating financial stability and a lower likelihood of default. This history can enable borrowers to qualify for better loan terms or refinancing options. In contrast, options relating to processing time, the initial period of a mortgage, or interest rates do not capture the essence of what loan seasoning specifically refers to, which focuses on the borrower's ownership duration and payment history.