Refinancing should take anywhere from 30 to 45 days on average, although that can stretch to 60 days if you hit any snags along the way. In other words: Don’t expect a refinance to happen overnight!
Although the refinancing process can take awhile, it’s definitely worth considering if you want to take advantage of a lower interest rate or withdraw some cash from your home equity (check a refinance calculator to see if refinancing makes sense for you).
Here’s why the process takes so long, plus some things you can do to speed things up.
Why refinance a mortgage?
The reason refinancing takes anywhere from 30 to 45 days is that it involves a series of procedures. Although it will be a little faster than getting your initial mortgage, it still has many of the same time-consuming steps.
Step 1: Research your options
The timing of this step is completely up to you. Contact multiple lenders and be straightforward about why you’re getting in touch.
“If you are shopping for rates, let the lenders know that upfront and ask for a loan estimate,” advises Laura Nickolay of White Oaks Wealth Advisors, Inc. in Minneapolis. Since interest rates fluctuate a bit daily, you should ask all lenders what their rates are on the same day, just so you can compare apples to apples.
You might want to start with your current lender, since it already has a lot of your information on file. (This could shave off up to a day or two off the processing time.) Your current lender may also be willing to waive the application fee, to preserve your business. You should contact other lenders as well, though, to ensure you’re getting the best rate.
You should also ask potential lenders how long the refinancing process typically takes. Lenders often don’t prioritize refinances because there’s less at stake; if you sense your refinance won’t be a priority with a lender, you may want to look for one that will push things through.
Step 2: Complete the loan application
Once you’ve chosen a lender, you’ll need to complete the application. This can generally be completed in a few hours, especially if you have all the documentation you need on hand. A good loan officer can make a difference at this point, as an experienced pro will know what documents you need to submit with your application to ensure the process goes as quickly as possible.
Step 3: Receive your loan estimate and disclosures
Lenders are required to provide your loan estimate and disclosures within three days of your application. Your estimate will contain your monthly payment information and how much you will need to pay in closing costs.
Step 4: Loan processing
Your lender will inspect all the documents you provided and request any additional documentation required.
Step 5: Appraisal
Not every refinance requires an appraisal, especially if you’ve purchased your home relatively recently. If you do need one, the lender will set it up while processing your loan.
Step 6: Underwriting
This can potentially be the longest step in the refinancing process. According to the Home Buying Institute, underwriting—where all paperwork is fully vetted for accuracy—takes an average of five to eight business days. In some cases, it can stretch on for weeks. Underwriting a refinance also takes longer than an initial mortgage, because it’s a lower priority for lenders.
“Underwriting departments will always review purchase transactions before refinances, simply because the purchase is affecting multiple parties and there is a deadline that needs to be met,” says Troy Owen of Homeowners Financial Group in Bakersfield, CA.
Step 7: Closing
Once underwriting is finished and your loan is approved, you can close on the loan. This typically takes a few hours.
How to speed up a refinance
While lenders are often the holdup with a refi, homeowners can also inadvertently slow things down on their end. Here’s how to keep things moving.
- Check that your application is complete: If any information is missing from your application, the lender will need to send back the paperwork for you to redo. At a minimum, you will need to provide proof of income, copies of your bank account and investment account statements, and the last two years of tax returns. “Try to get statements that are within the last month or so,” says Jonathan McAlister of Legacy Wealth Management in Memphis, TN. You will also need to provide a copy of your homeowner insurance policy, and you may need to provide a deed of trust and a property survey. Your lender can advise you on exactly which documents are needed.
- Make yourself available for the appraisal: Since an appraiser may need access to your home in order to make the appraisal, not being available on your end can significantly stall the process, according to Kristin Baker of White Oaks Wealth Advisors, Inc. in Minneapolis, MN. Make sure your lenders have a good contact number for you and know your contact preferences. If you can’t take calls during the day, let them know to text or email you.
- Respond to questions quickly: If you’re refinancing, chances are good that your lender will come back to you for something, whether it’s a question or an additional signature. The sooner you make yourself available, the faster the process.
- Know all the costs upfront: There’s more to a refinance than you might expect, and if you’re not aware of all the costs involved, you may end up scrambling for funds. For example, if you weren’t anticipating the closing costs, you may be unpleasantly surprised—they’re similar to the closing costs you dealt with when you originally purchased your home (about 3% to 4% of the total amount being refinanced, depending on location and lender).
- Check in often: If you’re getting radio silence from your lender, don’t be afraid to follow up. “Lenders will typically put refinances at the bottom of the pile,” says Owen. You know that saying about being the squeaky wheel; sometimes you need to make a little noise to move things along.
Curious whether you should refinance your mortgage? Check a refinance calculator to see if this move makes sense for you.
