How long does it take to refinance a house?
Refinancing your current mortgage can be a smart financial move, but it's important to understand the process to maximize its benefits. This comprehensive guide will walk you through every critical step, time frame, and tip to ensure a smooth refinancing experience.
By the end, you'll feel confident in making informed refinancing decisions and achieving your financial goals. Let's explore how to make refinance rates work for you.
To get started right away, complete our digital loan application, which simplifies the initial steps and speeds up the entire process.
What Is Mortgage Refinancing?
Mortgage refinancing involves replacing your existing mortgage with a new mortgage. It’s essentially a way to update your home loan, often to secure a lower interest rate, adjust the loan term, or switch to a different type of refinance loan like a fixed-rate loan.
How Much Are Closing Costs on a Refinance?
Closing costs on a term refinance typically range from 2% to 5% of the loan amount. These costs can include appraisal fees, tax returns processing, title insurance, and origination fees. Some lenders allow you to roll these costs into your loan, but this adds interest to the total amount, reducing the overall benefit of refinancing.
What Are the Steps Involved in Refinancing a House and How Long Do They Take?
Refinancing your current mortgage can help you reduce your interest rate, lower your monthly payments, or tap into your home’s equity. Here are the key refinancing steps to ensure a smooth process:
1 - Figure Out What Your Financial Goal Is
Before beginning the refinance process, it’s important to clarify your financial goals e.g., getting a home equity loan/HELOC.
Common reasons for refinancing include lowering monthly living costs, shortening the loan term to pay off the mortgage faster, or accessing cash for home improvements or debt consolidation.
2 - Get the Documents You Need
To apply for a refinance loan, you’ll need to provide several documents, such as:
- Recent pay stubs
- Bank statements
- Mortgage statements
- Homeowners insurance documentation
- Tax returns
These documents help lenders assess your financial stability.
3 - Lock in Your Interest Rate
Once you've submitted your loan application, you can lock in your refinance rates. Most rate locks last between 30 and 60 days, but with Rate, we offer extended rate locks of up to 90 days, giving you peace of mind.
Our experienced team will stay in touch to ensure your loan closes before the lock period ends, securing the best deal for you.
4 - Get Your House Ready for the Appraisal
Most mortgage lenders require a home appraisal to determine its current value. A licensed appraiser will evaluate your home and compare it to similar real estate recently sold in your area.
5 - The Underwriting Process
During underwriting, the loan officer reviews your application and supporting documents to assess your creditworthiness and determine your home’s value. If additional information is needed, such as clarifications on your tax returns or down payment, responding promptly can prevent delays.
6 - Close on the Loan
Closing is the final step in the application process. You’ll receive a closing disclosure at least three days before the scheduled closing date, detailing the final loan terms and fees. At closing, you’ll sign the necessary documents and pay any upfront closing costs. Afterward, your new loan replaces the original mortgage, and the terms of your refinance take effect.
How Long Does the Home Refinance Process Take?
On average, refinancing takes 30 to 45 days from application to closing. A Conventional Loan takes about 42 days (6 weeks) to close a standard refinance loan.
When refinancing an FHA Loan, it usually takes about 46 days (6.5 weeks). A VA Loan takes the Department of Veterans Affairs (VA) about 40 to 50 days, or about 7 to 8 weeks to process.
How Long Does It Take for a Refinance Approval?
Approval typically takes a few days to a week, depending on the complexity of your financial situation.
What Is the Turnaround Time for a Refinance?
The refinancing process can vary significantly depending on the lender. Online platforms often expedite the process, potentially completing a refinance in as little as two weeks.
How Long Should I Expect to Wait for a Refinance to Close?
After loan approval, it typically takes 3 to 7 days to close.
How Fast Can You Refinance?
In optimal conditions, a streamline refinance could be completed in as little as 15 days. For this to happen, all your documents need to be ready, the appraisal must be scheduled promptly, and there should be no issues during underwriting. If any of these steps are delayed, the process will naturally take longer.
How Long Does a Cash-Out Refinance Take?
A cash-out refinance often takes longer than a standard refinance due to its additional complexity. Lenders must carefully evaluate the amount of equity you’ve built up in your home to determine how much cash you can access.
What Factors Can Affect the Timeline of a Home Refinance?
Several factors can influence how long the refinancing process takes:
- Appraisal Complexity: If your home requires a detailed appraisal, or if there are discrepancies in the valuation, this could add time.
- Documentation Delays: How quickly you provide the necessary documents can significantly impact the timeline. Being prompt and organized is key to speeding up the process.
When Should I Refinance My Mortgage?
There are several situations in which refinancing may be a smart move:
1 - When Your Interest Rate Goes Down
A lower interest rate is one of the primary reasons people refinance. Even a small decrease can save you thousands of dollars in interest over the life of the loan and reduce your monthly payments.*
2 - When You Want to Switch Loan Types
Switching from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage can provide long-term security, as you’ll no longer have to worry about fluctuating interest rates. Conversely, moving from a fixed-rate to an ARM might make sense if you expect to benefit from lower rates in the near term.
3 - When You Want to Adjust Your Loan Term
Extending your loan term can lower your monthly mortgage payments by spreading them out over a longer period.
4 - When Removing Mortgage Insurance
If you put down less than 20% on your original loan, you’re likely paying private mortgage insurance (PMI). Refinancing can help you eliminate PMI if your home’s value has increased, lowering your loan-to-value ratio (LTV). Similarly, refinancing an FHA loan to a conventional loan may remove the requirement to pay mortgage insurance premiums (MIPs).
5 - When You Want to Access Your Home Equity
A cash-out refinance allows you to tap into your home’s equity for expenses such as home renovations, debt consolidation, or other large costs. Because mortgage rates are generally lower than other forms of credit, this can be a cost-effective borrowing option.
6 - When You Plan to Stay in Your Home
Consider how long you intend to stay in your home. If you plan to move in a few years, refinancing may not be worth the cost of closing fees. Calculate your "break-even point" to see how long it will take for the savings from refinancing to outweigh the initial costs.
You can use our Mortgage Payment Calculator to better understand your refinancing costs and savings based on how long you plan to stay in your home.
How Can I Make the Process to Refinance My Mortgage Quicker?
Here are some useful refinancing tips that will make the borrowing process go more quickly and easily:
1 - Look At Your Credit Report and Score
Your credit score is a critical factor in refinancing. A low score can increase the time it takes to secure approval or even prevent you from refinancing altogether. Improving your credit score before applying will help expedite the process and increase your chances of securing a favorable rate, especially when seeking programs like USDA loans or VA loans.**
2 - Pick an Online Platform
Using an online platform can help speed up the refinancing process. Rate’s Digital Mortgage Application allows you to submit your application online, track its progress, and easily upload required documents, making the entire process faster and more efficient.
3 - Maintain Communication With Your Lender
Stay in regular communication with your lender throughout the process. Open communication is key to keeping the process moving smoothly and to avoid delays.
At Rate, we prioritize effective communication with our clients. Our dedicated team is available to answer your questions and provide updates to ensure a seamless refinancing experience.
Contact us today to start your refinance journey.
4 - Avoid New Debt
Refrain from taking on new debt, such as credit cards or loans, during the refinancing process. Additional debt can negatively affect your credit score and increase your debt-to-income ratio, which may delay or complicate the refinance.
5 - Prepare for the Appraisal
Ensuring your home is in good condition can help speed up the appraisal process. Here are some tips to prepare:
- Clean and declutter your home.
- Make necessary repairs or upgrades.
- Document any recent improvements.
- Ensure the exterior is well-maintained to improve curb appeal.
6 - Ensure Your Home Meets Local Regulations
Make sure your home complies with local safety and zoning regulations. Check that sheds, fences, and other structures are in compliance, and that safety features such as smoke detectors and stair handrails are installed.
How Can I Apply for a Mortgage Refinance?
Rate makes it quick and easy to apply for a mortgage loan refinance. First, fill out our loan application online. This is where you can give us information about your home and yourself.
Our team will help you through the mortgage refinance process, making sure that the refinancing goes smoothly and quickly. Take the first step toward getting your mortgage refinanced today by refinancing with Rate!
*Savings, if any, vary based on the consumer’s credit profile, interest rate availability, and other factors. Contact Rate, Inc. for current rates. Restrictions apply.
**Rate, Inc. does not provide credit counseling or credit repair services.
Rate, Inc. is a private corporation organized under the laws of the State of Delaware. It has no affiliation with the US Department of Housing and Urban Development, the US Department of Veterans Affairs, the Nevada Department of Veterans Services, the US Department of Agriculture, or any other government agency. No compensation can be received for advising or assisting another person with a matter relating to veterans’ benefits except as authorized under Title 38 of the United States Code.