Weâre all looking for ways to cut down on expenses â especially fixed expenses that lock us into a contracted bill month after month. One common way to spare your budget is to decrease your living expenses, including your house payment. Refinancing your loan could help cut down on your mortgage payments and could update your loan terms, saving you money. If youâre considering refinancing, you may ask, âhow long does it take to refinance a house?â
Refinancing your home can be tedious but it could help your budget in the long run. Luckily, weâre here to help by sharing the typical refinancing process and detailing how to make it as efficient as possible.
How Long Does It Take to Refinance?
Typically, refinancing a house takes 45 days, but it may vary depending on your financial situation and your lender vetting process. Preparing your financials early and picking the appropriate lender for your case are a few factors that could help the timeline of your updated mortgage loan. To speed up the refinancing application process, skip to our section below or keep reading to refinance your home in seven steps.
Steps to Refinance Your Home
Refinancing your mortgage has its positives and potential negatives. You could decrease your monthly mortgage payments, get a shorter loan period, or lock in a better interest rate. But you could also end up spending more on application fees or face prepayment penalties. Before speaking with a lender, research the refinancing process, requirements, and added costs that could deter your ideal result.
Step 1: Define Your Financial Goals
Start by asking yourself what youâd like to get out of a refinancing loan agreement. Do you want to shorten your loan term? Do you want to secure an interest rate lower than your current rate? Or, do you want both? Determine your ideal end result, verify your investment choice, and seek a lender that supports your goals.
Step 2: Compare Lenders (and Reviews)
Ask around or search online to find the right lender for you and your goals. Pick out a few professionals youâd be interested in working with and ask them their rates, terms, and requirements. To help narrow down your lender options, seek out reviews online or ask for referrals in your network to ensure you pick the right choice.
Step 3: Double-Check for Additional Fees or Costs
Refinancing a loan can rack up a bill you may not be aware of until after you start the loan process. Attorney, application, inspection, appraisal, and title searches are a few refinancing tasks that you could be charged for. To budget for these expenses, save a bit extra from each paycheck or assess your current savings account using our app. If you have enough saved, start inquiring about this loan. If you donât, put extra cash into savings each month until you have enough to cover the extra charges.
Step 4: Apply for Your Best Loan Estimate
Once youâve found the right loan for your financial goals, the next step is to fill out your application.. To submit your application, you may have to provide proof of income, assets, debts, and other forms that complete your financial portfolio. These documents may be helpful in the application process:
- Proof of income: W2 earnings statements, 1099 DIV income statements, Federal tax returns for the last two years, bank statements for the last few months, recent paycheck stubs.
- Credit information: your credit score and your credit reports from the last three years will be pulled for you, upon your approval.
- Proof of assets: reports from your checking, savings, retirement, and other investment accounts.
- Proof or insurance: providing evidence of your homeowners and title insurance.
- Debts statements: statements of any debt accounts open â student loans, credit cards, current home loan, auto loans, etc.
Step 5: Start the Loan Process and Appraise Your Home
Itâs now time to begin the loan process and appraise the value of your home. Once youâre approved for your loan, itâs time to get your home inspected, appraised, and conduct a title search. To ensure you’re on track with your timeline, prepare all your documents ahead of time. Skip to our section below for more ways to speed up this process.
Step 6: Wait for Underwriters to Cross-Reference
Now, the underwriters take it from here. Underwriters double-check your financial information to ensure everything is accurate before approving your loan. Your creditworthiness and debt-to-income ratio are generally the key factors underwriters will look at. Your property details, including when you bought your house and your home’s value, are a few other determining factors. This process may be the longest time constraint, taking a few days up to a few weeks.
Step 7: Close Your Loan to Lock in Your Interest Rate
Once your loan is approved and youâve agreed upon your terms, itâs time to lock in your rate. This stage is commonly known to stretch your timeline as well. It can take your lawyer anywhere from one day to two months to settle your current loan and redeem your property. Keep in mind, this is typically where you pay the brunt of your fees whether youâre approved or denied. These fees may include closing costs and application fees.
Ways to Speed up the Application Process
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Refinancing your home takes time, but it can be well worth it in the long run. Getting a lower interest rate and a shorter term length could lessen your payments going towards interest. Use our app and our loan calculator to see what refinancing could do for your budget.
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