Are you looking to get a lower interest rate for your mortgage? Do you want to look for a way to pay off your mortgage faster? Are you considering using the equity in your home to pay for a major expense?
Then a mortgage refinance may be something that could be useful for you.
Refinancing involves taking out a new mortgage to replace the existing one. You’ll have to go through an approval process before a refinance goes through, and the process can either close faster or slower compared to when applying for your first mortgage.
Sometimes refinancing can take a while to complete. The question is, how long? And what exactly goes into a mortgage refinance?
How Long Does a Mortgage Refinance Take?
While there are a number of factors that can influence the length of time that it takes for a mortgage refinance to go through, they typically take about 30 to 45 days to complete, on average. That said, it can take a lot longer than this to complete a refinance if there are any obstacles that are met along the way.
So, what goes into a mortgage refinance? And why do such processes take so long?
Steps to a Mortgage Refinance
Refinancing takes a while because of all the in-depth steps that are required, including the following:
Finding a lender. Many homeowners just work with the lender that they already have their first mortgage with. But you’re not necessarily tied down to this lender. If you so choose, you can work with another lender to get a mortgage refinance. If you do decide to go with another lender, the process may take a couple of days longer because you’ll have to submit all paperwork that your current lender might already have.
Filling out and submitting an application. Just like you had to fill out an application for your initial mortgage, you’ll have to fill out one for a refinance as well. These applications are rather lengthy, as you already know. But your lender will be able to help you move along the application process rather quickly by guiding you on the documents that will need to be submitted along with the application.
The documents that you will likely have to submit can include the following:
- Two years worth of W2’s
- Bank statements
- Tax returns from the last two years
- Asset and liability statement if self-employed
- Profit and loss statement if self-employed
Waiting for your loan estimate. No more than three days after submitting your application, your lender will be required to provide you with your loan estimate and disclosures. The estimate will detail the monthly payment information and the amount you’ll be responsible for paying in closing costs. After this, the loan will be processed after your lender carefully reviews all of your documents.
Waiting for the property to be appraised. Your lender will want to verify what your home is worth before approving the refinance.
Underwriting and closing will take place. Probably the longest step in the refinancing process is the underwriting phase. This is the part where all of your documents will be checked for complete accuracy and takes about a week or so to complete. If there’s an issue, however, this phase can take a lot longer. Generally speaking, underwriting a refinance takes longer than a first mortgage.
If everything checks out, then closing will take place, which should only take a few hours.
Can You Speed Up the Process?
The refinance process already takes a long time, but is there anything you can do to speed it up?
Maybe. The first thing you’ll want to do is work with a competent loan officer, as this can be a major reason why the process can take forever. Further, you can make sure that you fill out your application completely with no errors and ensure that you submit all pertinent paperwork on time.
The Bottom Line
Refinancing is definitely not something that will happen tomorrow. It definitely takes time, but it will be worth the wait if you’re able to refinance at a lower interest rate or if you need to get your hands on some equity to cover a costly expense.