Refinancing a mortgage can be a smart move for homeowners looking to save money or leverage their equity, depending on their circumstances. Before diving into the process, one of the first questions people ask is: How long does it take to refinance a house?
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The time it takes to refinance will vary from borrower to borrower. Here’s what you need to know about the process, and a few ways you can speed it up.
How long does a refinance take?
The latest Ellie Mae Originations Report shows that refinancing took an average of 44 days in December 2018, an increase of three days from a year earlier. But some experts say the process can move a lot quicker than that.
“The entire process for refinancing an existing home mortgage, if properly executed, should take no longer than 30 days,” said Greg MacDonald, a mortgage banker at Caliber Home Loans in California.
MacDonald, who has 36 years of experience in mortgage banking, has seen some homeowners refinance in as little as 14 days. “A lot of it is dependent on the consumer and how quickly they can gather the necessary information,” he said.
Understanding the process can help you minimize how long it takes to refinance a house.
The mortgage refinance process
Even though all borrowers follow similar steps to refinance a home, the time it takes for both you and your lender to complete them will vary. Here’s what needs to happen to refinance a mortgage:
- Get prepared: There are two things you need to do to prepare for home refinancing. First, nail down the reasons why you want to refinance. Perhaps you want to take advantage of a lower interest rate or get cash for home improvements. Going into the process with a clear idea of your goals can help you get the right type of refinancing for your needs, MacDonald said. Next, start getting your house ready for an appraisal. The appraiser will evaluate the condition of your property, so tidy-up both the interior and exterior of your home, he said. “Lenders are looking for borrowers with pride of ownership. They want to work with people who take care of their homes,” MacDonald said.
- Research loan options: There are many ways to refinance a home. Are you looking to take advantage of current low interest rates with an adjustable-rate mortgage? Do you want a new 30-year fixed mortgage that might lower your monthly payments? Do your homework to learn the pros and cons of each and find the right refinancing option for your needs.
- Research lenders: Now that you’ve researched loan options, you probably have a good idea about what the market offers and how you might proceed with refinancing. The next step is to research lenders and compare estimates. LendingTree, the parent company of StudentLoanHero, has lender reviews from recent customers that can help you narrow down your search. It’s also a good idea to check lenders in the Nationwide Multistate Licensing System Registry Consumer Access site, MacDonald said. The site will allow you to see information about mortgage companies and their staffs, including employment history.
- Understand fees and costs: Even if you’re refinancing your home to save money, you may still incur some additional costs, like origination charges, appraisal fees, credit report fees, title search fees and more. Understanding these costs is a critical component in finding home refinancing that aligns with your financial goals. “Ask the lenders you’re considering for an estimated cost sheet. It will have all those fees line-itemized, so you can compare different offers and see if anything jumps out at you,” MacDonald said. Loan officers should be able to give you a list of fees within a few hours at most, he added.
- Gather documents: While some lenders will require very little paper documentation, others may need some materials from you. Start collecting your pay stubs, W-2s, tax returns, bank statements and other financial documents.
- Apply for the loan: The next step is to fill out the application for the loan. Many lenders now allow you complete most of the application online. Using the information you provide, the lender can use back-end systems to get your bank statements, employment verification, pay stubs and other important information that same day.
“It should take about eight minutes to fill out the loan application,” MacDonald said.
Make sure you double check all the information on the application before you submit it. An error can delay the entire refinance process.
- Get a loan estimate: Many lenders can provide you a loan estimate within two to three hours of receiving your application, assuming it was filled out properly, MacDonald said. The law requires lenders to send the loan estimate no more than three business days after you send in the application, according to the Consumer Financial Protection Bureau (CFPB). The document will include your estimated interest rate, monthly payment and closing costs, along with estimated taxes and insurance fees, among other relevant information.
- Loan processing: At this point, the mortgage company will verify the information you’ve sent. Processing generally takes one to two days, MacDonald said.
- Get an appraisal: If you haven’t yet had an appraisal and the lender requires one, it should happen at this point in the refinancing process. The mortgage lender will make all necessary arrangements for an appraisal. Some lenders use technology that gives them the approximate value of your home without the need for an in-person visit from an appraiser.
- Underwriting: Once the appraisal and paperwork are complete, the mortgage company begins underwriting, or verifying all documents. The underwriters review everything to make sure they have all necessary information and that it’s accurate. The time it takes to underwrite a loan will vary.
- Lock your rate: You can lock your interest rate at any point in the process of refinancing a home. An experienced lender can advise you on the best time to lock your rate, MacDonald said. Some experts recommend securing your rate no later than six days before closing.
- Sign loan documents and close: Finally, the time has come for loan closing. Some states allow you to sign your loan online, while others require an actual signature. Your mortgage company may send a mobile notary to your home or ask you to visit its attorney’s office or escrow company to sign the loan and make it official, said MacDonald.
How you can speed things up
Looking to save some time on the process of loan refinancing? Here are some tips:
- Gather your documents: It can take awhile to dig out old paperwork from your archives. Start this process early and stay organized. Gather your proof of identity, pay stubs, W-2s, bank statements, proof of supplemental income and anything else that mortgage companies request.
- Use a closing checklist: There are many steps to refinancing a home, and it’s all too easy to forget something important. Using the CFPB’s closing checklist can help you stay on top of things.
- Work with tech-savvy lenders: “Technology enables a speedy outcome,” MacDonald said. “Proper leverage of technology lessens the time it takes to fund and close your loan by as much as two weeks.” Read lender reviews to see if other borrowers were satisfied with their use of technology and the time to close.
- Follow up quickly: Your lender may ask you to provide extra documentation or answer questions about your employment or finances. Provide these details promptly to avoid delays in refinancing your home.
How long does a refinance take? It depends. But if you go into the process with a proactive attitude and the ability to stay organized, you can minimize unnecessary delays and close on your loan as quickly as possible.