Wait, How Long Is the Mortgage Refinance Process?


There’s no definite answer to that. Some homebuyers are able to refinance in a breeze, some have to wait longer. The process of refinancing is similar to that of taking out and closing on your old mortgage. When you refinance, you’ll be re-evaluated, credit score and all. While delays seem inevitable, there are ways you can do to at least shorten the waiting period. How shall you do it? »Find out more about refinancing here.»

Refinance: Average or Long?

A standard refinance usually takes 30 to 45 days. Granting all goes well, you should be able to finish the refinance process within that period. There are refinance deals though that go beyond the usual timeframe and there are several reasons for that.

It could be the interplay of the lender’s unique application process and strict government policies. As a borrower, it might have taken you longer to submit documents as needed throughout the process. And of course, given today’s noticeably low rates, there’s the flood of refinancing applications and lenders can only handle as much especially if they are understaffed.

Credit scores are also a source of delay for some homeowners. That’s why those who are in no hurry to refinance are advised to wait or improve their credit scores first. But for those who need to refinance as a matter of urgency, especially when they need the cash from their equity, why shut them out? It’s only natural to look at how refinancing works to see which areas can be improved on or where delays are reasonably expected. »Find out more about refinancing here.»

Four Stages of Refinancing

Application, Verification, Documentation

Start with a completed Uniform Residential Loan application. Depending on your lender, you may be able to complete your application in person, over the phone, or via the internet.

After filing your application, you will be asked to submit papers, read a proverbial mound of documents for verification. It is at this stage that you can help shorten the process. As gathering documents take time, it’s important to have copies of them ready and updated to be shipped anytime to the lender.

An example document checklist is as follows:

  • Personal information (Full name, SSN, date of birth, address)
  • Income and employment/self-employment information (pay stubs, Form W-2s, tax returns, employment history, VA Certificate of Eligibility, etc)
  • Credit information (bankruptcy, divorce, alimony, a written explanation on credit report inquiries or late payments)
  • Property information (value of the property, mortgage/lien/line of credit balance, owned real estate, homeowners insurance policy)

Within three business days of receiving your application, your lender is legally required to provide a Loan Estimate, which sets forth the estimated fees and closing costs, as well as loan terms and monthly payment on the mortgage. A Loan Estimate is subject to change.

»Where to find the best mortgage rates?»

An Underwriting

Upon your consent and submission of additional documents as requested, your application will move forward to the loan processor who reviews your loan application. If your loan application file is complete, it will now go to the underwriter who decides whether to approve or not the loan application.

The importance of submitting all paperwork needed without delay can’t be emphasized enough; they will be used by the underwriter to assess your risk profile. During the underwriting phase, expect to submit additional documents, modify the homeowner’s insurance to add specific coverage, and meet certain conditions to close on the loan.

Appraisal Before Approval

Before any loan approval happens, the lender has to order a home appraisal to establish your property’s market value, i.e. what price it commands if sold in the open market. The appraiser will visit and inspect the property, then compare the recent home sales within the area to help in the determination of a fair market value.
The lender will use the final appraisal report to determine the amount and terms of the mortgage. An appraisal can take days or weeks as it varies.

At Closing

If the lender approves your loan application, you are all set for closing. However, closing may not run as smooth as expected due to problems with appraisal, titles (when existing liens are found), or even new mortgage rules that lenders are working around with.

As you will have gathered, how long or short the process of refinancing depends on a lot of things. Do your part and let the lender do theirs. »Jumpstart the refi process by contacting any of our lenders!»

Justin McHood

Justin McHood is America's Mortgage Commentator and has been providing expert mortgage analysis for over 10 years.

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