How long does it take to refinance your mortgage?
Mortgage refinancing can be a great way to reduce your monthly mortgage payments. With refinancing you can ideally apply for a loan with a lender at a lower interest rate and/or better term than the one you're currently financing.
But while refinancing can cut down the overall cost you'll pay over time, you'll want to keep term duration and interest rates in mind. In addition, the time it takes to refinance can vary depending on multiple factors, including property size, inspections and other components.
If you think you could benefit from refinancing your mortgage then start by answering a few quick questions to see what you could qualify for.
How long does it take to refinance your mortgage?
It can generally take up to two months to refinance your mortgage, though it typically takes between 30 to 45 days. But as mentioned earlier, the time it takes will differ per individual.
For instance, the following can affect the refinancing timeline:
- Financial paperwork requirements
- Underwriting process
- Appraisals/inspections
As you may have experienced, the underwriting and appraisal process can take the longest, while other steps — such as providing various financial documents — may not take as long. You can speed up that process by having such documents (e.g., proof of homeowners insurance, paystubs, tax returns, W-2s, and bank statements) readily available.
If you think you're ready to refinance now then start the application process by answering a few simple questions.
How much does mortgage refinancing cost?
Refinancing ultimately includes several costs, such as loan origination fees, underwriting fees, credit report fees, appraisal fees, title insurance fees and recording fees.
Data from Freddie Mac shows that, on average, homeowners pay around $5,000 in closing costs for mortgage refinancing. However, this number will vary for individuals according to their home's location and loan size.
In addition, there are several mortgage refinancing options available, and each type significantly impacts how much you'll pay over the life of your mortgage.
These include rate and term refinances, cash-out refinances, cash-in refinances, FHA Streamline refinances, VA Streamline Refinances, USDA Streamline Refinances, short refinances, no-closing-cost refinances, and reverse mortgages.
Should you refinance your mortgage?
You should refinance your mortgage if you're certain that doing so will save you money in the long run. The goal with refinancing is to lower your financial burden over the life of the loan, so you want to make sure your new interest rate and term aren't more expensive than the one you originally applied for.
Despite a rise in interest rates in the last year, there are still many homeowners who could benefit from refinancing their homes now.
However, it's important to note that you'll have to pay closing costs again when refinancing. Plus, you could end up paying more each month — even if you've secured a lower interest rate — if you choose a shorter term than the one you initially purchased.
For instance, if you originally had a 30-year loan term, but you refinanced at a lower interest rate to a 15-year term, you'd still likely end up paying more per month. This may be worth it to you, however, if you want to pay off your loan sooner than you initially agreed to. It will also save you the money you otherwise would have paid in interest over the initial term length.
Explore your mortgage refinance options now to see what you could qualify for.
The bottom line
Mortgage refinancing can generally take between 30 and 45 days, depending on things like the size of your loan and the location of your property. While it can save you money, you'll want to carefully research refinancing options to ensure you've found the right one for your financial situation.
