How Long Does It Take to Refinance a House?
Refinancing a mortgage can sometimes be an involved process, which may make interested homeowners wonder, “How long does a refinance take?”
A mortgage refinance typically takes 30 to 45 days to complete, but the exact time to close depends on a lot of different moving parts, some of which are out of your control. You may be able to speed up the process and avoid unnecessary delays, though, if you have a solid grasp on the mortgage refinance process.
- How long does a refinance take?
- 10 steps to speed up the mortgage refinancing process
- Step 1: Know exactly why you want to refinance
- Step 2: Research loan options that fit your goals and finances in advance
- Step 3: Do some homework on your home’s worth
- Step 4: Pick a refinance loan that doesn’t require an appraisal
- Step 5: Ask lenders about their refinance turn times
- Step 6: Decide how you want to pay fees and additional cost ahead of time
- Step 7: Gather financial documents and fill out an accurate application
- Step 8: Review loan estimates and lock in your rate a loan
- Step 9: Respond quickly to any loan documentation requests
- Step 10: Be flexible with your closing time
How long does a refinance take?
As mentioned, a typical refinance can take 30 to 45 days to close. It took about 50 days, on average, to close a refinance for all loan types as of August 2020, according to the latest Ellie Mae Origination Insight Report. Government-backed refinance loans from the Federal Housing Administration (FHA) and the U.S. Department of Veterans Affairs (VA) are taking a bit longer than conventional refinances.
One thing is clear from the report: Lower interest rates are resulting in longer average times to close. In fact, the refinance process is taking 15 days longer than it did in March 2020 when mortgage rates first broke historic lows.
10 steps to speed up the mortgage refinancing process
Step 1: Know exactly why you want to refinance
One of the most important steps to refinance a home is: Be clear on your financial objective before you apply. If you change your mind during the home refinance process, it could create delays. For example, you might not need an appraisal if you’re just lowering your rate and payment, saving you the time it typically takes to wait out the appraisal process.
However, if you suddenly decide you want to tap equity, in most cases, the lender will need to order an appraisal. The loan would have to be approved again for the extra cash, which means your rate could change and your closing date might be pushed out.
Step 2: Research loan options that fit your goals and finances in advance
One mistake that can add days if not weeks to the average mortgage processing timeline: Picking the wrong mortgage program. It could cost you time and money if the lender has to deny your application or resubmit it to a program that better fits your financial profile.
The table below provides a quick overview of which refinance programs are best suited to your credit scores, equity and financial goals.
|If you …||Then consider …|
|Have good credit and want a lower rate||Conventional rate-and-term refinance|
|Have poor credit and want a lower rate||FHA rate-and-term refinance|
|Are an eligible military borrower and want a lower rate||VA rate-and-term refinance|
|Have a current FHA loan||FHA streamline|
|Have a current VA loan||VA interest rate reduction refinance loan (IRRRL)|
|Want to tap equity and have good credit||Conventional cash-out refinance|
|Want to tap equity and have poor credit||FHA cash-out refinance|
|Want to tap equity and are an eligible military borrower||VA cash-out refinance|
Step 3: Do some homework on your home’s worth
Lenders base refinance loan amounts on how much equity you have, so pay attention to the prices that homes similar to yours are selling for in nearby neighborhoods. Plug your address into an online home value estimator to get a value ballpark. Or give your real estate agent a call and ask for a comparative market analysis for a more precise figure.
Be realistic with your value estimate: If the appraised value comes in significantly lower than your guess, the lender may have to recalculate your interest rate and costs, and disclose the changes for you to review. The refinance process could take longer while the underwriter reviews the changes.
Preparing your house for a refinance appraisal is worth the effort to present it in its best light when the appraiser arrives. Declutter your rooms and spruce up the landscaping so it shows well inside and out.
Step 4: Pick a refinance loan that doesn’t require an appraisal
Avoiding the extra time it takes a licensed appraiser to prepare a home appraisal report may shave some days off your mortgage loan process timeline and cut down on your closing costs. If you just want to reduce your interest rate or have an FHA or VA loan, you may be eligible for a no-appraisal refinance option.
Conventional appraisal waivers. Conventional loans aren’t backed by the federal government and follow guidelines set by Fannie Mae and Freddie Mac. Fannie Mae may offer an appraisal waiver if you have at least 10% equity. Freddie Mac requires at least 20% equity for its waiver consideration.
FHA streamline. Homeowners with a current FHA mortgage may be eligible for the faster and easier refinance process of an FHA streamline refinance with no appraisal. An added bonus: No income verification is required.
VA interest rate reduction refinance loan (IRRRL). Military borrowers who have paid their current VA loan on time can roll closing costs into an IRRRL. No appraisal or income documentation is required.
Bonus tip for cash-out refinance borrowers: If you’re tapping equity up to 70% of your home’s value, you may be eligible for a Fannie Mae appraisal waiver. All government-backed and Freddie Mac cash-out refinances require an appraisal.
Step 5: Ask lenders about their refinance turn times
When rates are low, lenders are inundated with refinance requests. Besides shopping with at least three to five different lenders, it’s a good idea to:
- Ask about average mortgage processing times. Loan officers should tell you upfront if their rate quotes are for 30 or 60 days. Keep in mind the longer you lock in your rate, the higher the rate and costs may be.
- Shop around more. Don’t settle for just a few cost quotes: Some lenders may purposely raise their rates temporarily to avoid taking more business than they can handle.
- Use an online comparison tool to speed up your rate quotes. Mortgage companies that participate in online comparison sites proactively compete for your business based on the data you enter. The alternative: Contacting multiple mortgage companies on the same day, gathering loan estimates and tracking the information on your own.
Step 6: Decide how you want to pay fees and additional cost ahead of time
Loan officers must provide new disclosures if you request any changes to your loan amount or interest rate during the refinance process. If you decide you want to finance closing costs with a higher loan amount or opt for a no-closing-cost option before closing, you’ll need to wait a few extra days for a new Loan Estimate reflecting the changes.
Step 7: Gather financial documents and fill out an accurate application
How quickly you can refinance a mortgage depends on how accurate your loan application is. Incorrect or missing information can create delays during the refinance process. There are also a few extra items you’ll need with a refinance that weren’t required when you bought your home:
- Current month’s pay stubs
- W-2s for the last two years
- Names and phone numbers of employers for the last two years*
- Current two months’ bank statements
- Current mortgage statement
- Current homeowners policy with contact information
- Current property tax statement
*Lenders will verify your employment several times. If you change jobs, be sure to let your loan officer know.
Bonus tip for tech-savvy refinance borrowers: Some online lenders may offer electronic income and asset verification. With your permission, they’ll pull your income information directly from your employer and asset balances from your bank.
Step 8: Review loan estimates and lock in your rate
Once you’ve compiled three to five loan estimates, it’s time to choose your lender and lock your rate. The estimates are date-sensitive; rates change daily so request updated figures if you don’t lock in the same day you receive your initial quotes.
Once you lock in your mortgage rate, keep track of your lock expiration date. You’ll need to get all your paperwork in well ahead of that date, so you don’t end up spending money for a rate-lock extension.
Step 9: Respond quickly to any loan documentation requests
Be on the lookout for calls from your loan officer, mortgage processor or even the lender’s underwriter. They may need your help managing the mortgage loan process timeline. Expect calls about setting up the home appraisal, extra documents or for help verifying your employment before closing.
Once your loan is cleared to close you’ll receive a closing disclosure three business days before your signing date. Review it to make sure everything’s correct and coordinate a closing time with your lender.
Step 10: Be flexible with your closing time
You may sign with a notary, electronically with an eClosing or in person with an attorney or escrow officer. One important difference between the refinance process and a purchase: Your refinance loan will not close until a special three-business-day “right of rescission” period ends.
For example, if you sign your refinance papers on Monday, federal law gives you three business days to mull over whether the refinance is worth completing. If you don’t cancel by midnight of the third day (Thursday), your loan will close on Friday.