After considering the possibility that the whole Home Refinance process will take time and effort on your part, you might be thinking about how much time exactly does it take to refinance your home, especially if this is your first time to go through the process.
The quick and short answer to that is 45 days.
The average processing time of home refinancing takes anywhere from 30 to 45 days that can be extended to 60 days— if there’s an issue that will be encountered along the way.
Fast Track Refinancing, also known as FastRefi, is a process of having your loan switched to a new lender in a span of three days. While this is not offered by all lenders, you can discuss the estimated length of the refinancing process in your initial contact with your lender.
The Fast Track refinancing process is offered by lenders as a way to lessen the time between you making the decision to refinance and them closing the refinancing deal. This gives your old lender less time to offer you incentives to stay and you can have the process completed in a matter of days rather than thinking about it in the future. Fast Track process reduces the time taken to refinance by paying your old lender the outstanding amount of debt before they give the title to your home with your new loan from your new lender. This also means it cuts out a lot of back and forth communication between lenders, hence, faster and quicker process for all parties involved.
For a starter, it is important to remember that there are two phases to the refinancing process —the before and actual refinancing.
Having a clear idea of what your main goals are in going through the process of home refinancing is part of the first step. Your goals will be your guide through your decision-making process. Establishing your end goals such as lowering your monthly payment amount, consolidating debts etc., is an essential task in this stage.
The whole home refinancing is time-dependent on a number of procedures such as appraisal, your lender and credit checks. Some traditional banks tend to have a longer timeline for underwriting refinances than fintech lenders who use automation to speed up the process.
Thanks to modern technology, most financial institutions and lenders use automation to speed up the process by streamlining procedures that introduced digital signatures and eliminating the need to upload tons of documents. Lenders, instead, will just ask you to connect your accounts to their system so they can just pull the information they need that makes home refinance borrowing process faster than they used to back in the days.
Another significant time-saver is the eliminating in-person meetings, that includes in-person signing, in-person notaries, and in-person appraisals. Although there are some instances where these things cannot be avoided, such as mortgages requiring in-person appraisals, it is still more convenient and safer to provide e-sign and e-notaries than the actual physical counterpart.
Meanwhile, the normal process with traditional banks takes between 20 to 45 days. Some lenders and banks can even shave it off to as little as 15 days from the closing. That means getting your paperwork in order.
The sooner and more prepared you are, the quicker the process will be for you. Getting your paperwork and requirements as soon as you can helps speed up the process. Make sure to include and consider that you have to request copies of multiple documents from the IRS, your accountant, employer, or banks to send you your copies of tax returns or pay stubs. Remember to factor this phase into your timetable in case you have these documents on hand yet.
After the initial process is complete and you have a loan in mind that you want to switch to, you can now begin the actual phase of the refinancing process. Make sure you locate all the necessary info about your current loan and any relevant paperwork. Once you are armed with all the information you need, you can start comparing loan choices and pick out an option that suits your goals.
There are cases where the process takes longer than expected because of missing information from your application. At the bare minimum, you will need to provide the last two years of tax returns, investment account statements, proof of income and bank account statement, so keep these things handy. Making sure that these documents are ready will help the process to go smoother.
Once they receive your application and documents, they will then decide to progress with the process and will organize a valuation of your property. The lenders will need to be valued so the lender can determine the loan-to-value ratio that needs to be 80 percent or less.
Since an appraiser needs to access your home in order to make the appraisal, it is necessary to make yourself available for the appraisal and respond to questions as quickly as possible. Anticipate all the costs upfront to avoid scrambling for funds last minute and be aware of all the costs involved such as closing costs, etc.
Follow up and check in often with your lender on the status or any updates on your application. It takes between 2-4 weeks for them to arrange and organize the terms of transferring the debt and property title before the loan is settled. Once everything goes smoothly up until this point, you will then have the lender approve the loan you’ve been waiting for.
When the loan is approved, your new lender will coordinate with your new lender to process the debts and property title transferred. This process will take a couple of weeks at most to be completed and just anticipate all the fees involved. In some cases, the fees associated with switching loans will be covered by your new mortgage lender and will just add into the total mortgage amount that you have to pay.
Even though the refinancing process can take a while, depending on your current situation, it’s still worth considering if you want to take advantage of lower interest rates or withdraw some cash from your home equity. Fortunately, gathering all the required documents you’ll need as early as you can, preparing yourself to answer questions and retrieving more documentation are steps you can take to move the process along.
Take your time in researching for lenders and don’t rush the process too much. This initial step is very important since it will give you a basic idea if you will be qualified or will be rejected based on the initial assessment they will make. Read lender reviews so you can choose a quality lender and a loan with the best terms you perfectly suits your needs.