Mortgage refinancing has become a popular option for many homeowners in recent years.
With mortgage rates near historic lows, it’s no wonder so many people are eager to refinance their mortgages.
According to Investopedia, refinancing a home usually costs 3% to 6% of the total loan amount.
But how long does it actually take to refinance a mortgage? Generally, the refinancing process can take anywhere from 45 days to several months.
Let’s get started to learn about refinancing a mortgage in depth.
How Long Does It Take To Refinance A Mortgage?
Although there are streamlined refinance options available, it usually takes six weeks to refinance a mortgage.
You can have more control over how long it takes to refinance your mortgage if you know the aspects that might speed up or slow down the process.
According to data from the December 2021 Origination Insights Report from ICE Mortgage Technology, a refinancing loan typically closes in 45 days.
Traditional loans require less time to complete than refinance loans sponsored by the FHA or Federal Housing Administration or the U.S. Department of Veterans Affairs (VA).
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Steps Involved In Refinancing A Mortgage
Refinancing your mortgage, in simple terms, is taking out a new loan to replace your existing one.
That means the lender will need to go through the same process they did when you first applied for your mortgage.
These are the following steps involved in refinancing a mortgage:
1. Hire a Mortgage Broker
We advise hiring a mortgage broker who can identify a suitable lender for your refinancing.
Mortgage brokers have a network a large number of lenders and can work on your behalf to get you the best deal possible.
It’s important that you know what your requirements are before speaking with a broker about your refinancing options.
Focus on what a broker can give you in terms of offering the best service and the loan conditions rather than rates, fees, and other financial details.
Many borrowers do not understand the conditions of a loan because they become concentrated on the interest rate, especially in the context of the rising interest rates.
2. Submit Your Documents
If you have all the required paperwork, the mortgage refinancing process can be completed in as little as six weeks.
In addition to the loan application, you should have your current mortgage information handy, as well as identity documents, tax return statements, and employment verification.
The process of refinancing a mortgage must include a fresh property appraisal.
The time it takes to refinance a mortgage is highly influenced by the schedule and timely completion of the appraisal.
The appraisers in your neighborhood who can do this type of work are in high demand and may have a backlog of requests.
Most appraisals cost several hundred dollars, and you will probably be responsible for paying for them.
Even though they may seem like an extra investment, appraisals are an important part of the refinancing process because they help to protect both you and the lender.
4. Loan Approval
After you submit all the necessary paperwork and complete the appraisal, the lender will now access and review your application to determine if you can get the approval for refinancing.
This is usually when the loan officer assigned to your case will contact you to go over the loan details and answer any questions you may have.
What Can Delay a Refinance?
While the process of refinancing a mortgage is typically pretty straightforward, there are a few things that can delay the process and make it take longer than expected, such as:
- Paperwork Delays: You are responsible for conforming to the lender’s requirements in terms of the type and format of the documents they require. Missing deadlines might cause underwriting and, ultimately, delay in closing.
- Interest Rate Lock Expiration: Early in the application process, you’ll probably lock in an interest rate, but you’ll have to close the loan before the lock expires. If you don’t, you’ll need to speak with the lender about a possible extension of the rate lock or a new rate.
- Complications With Title: Before refinancing, you must settle any liens that the title firm discovers on your property in addition to the existing mortgage debt.
So, how long does it take to refinance a mortgage? If you have all the necessary documents in order and there are no surprises, the process will take only 6 weeks (roughly 45 days).
If you hit a few snags along the way, it could take up to 3 months max.
Shefali Jain is a Content Editor & Writer at National Planning Cycles.
After completing her graduation in hospitality, Shefali decided to follow her passion and started writing. Shefali has been writing for two years now and contributes to our website as a skilled editor and content writer with strong research skills. Writing product and service reviews, biographies, and book reviews are some of her key areas, among many others in which she specializes.