Refinancing your mortgage? These factors will determine how long it takes

Mortgage refinancing refers to the process of getting a new home loan to replace your existing one. You may want to go this route to lower your interest rate, lower your payments or cash out some of your equity. A mortgage refinance can offer many appealing benefits for homeowners but it won't necessarily happen overnight.

The process of actually completing the refinance can be quick or drawn out. So how long can you expect it to take? In this article, we will detail what you should know, including turnaround times and how mortgage refinancing works. 

If you think a mortgage refinancing could work for you then start by answering a few short questions to determine your eligibility.

How long it takes to refinance a mortgage

The mortgage refinance process typically takes somewhere between 30 and 45 days, according to Rocket Mortgage. Here's what the process looks like. 

Apply for a new loan

After reviewing your refinance loan options, you'll need to apply for the new loan type you want. You can do so with your existing lender or with a new lender. It's always a good idea to shop around and get a few quotes so you can find a competitive deal. 

The application process will likely be similar to what you experienced with your original mortgage. You'll need to provide information on your income, assets, credit and debt, along with proof of all that you claim (e.g. W2, tax return, bank statements, etc.). 

Once you've provided all of the required information, the lender will review it and let you know if you're pre-approved. 

You can explore your loan options with Rocket mortgage online now or use the table below to start researching lenders.

Consider locking in your mortgage refi interest rate

If you get pre-approved, many lenders will give you the option to lock in an interest rate. By doing so, you can ensure that you end up getting the refi rate you qualified for at the time of your application.

A rate lock can be a good idea when mortgage refi rates are expected to increase in the near future. Without a rate lock, your rate could increase, driving up your payments and causing you to lose your approval or negate the savings of a mortgage refinance altogether. 

Rate locks will come at an extra cost which can vary based on the lock period you choose. 

Underwriting

Next comes underwriting. During this phase, your lender will verify all of your information and ensure your loan meets its requirements. They'll also look into your property and will require a home appraisal.

Home appraisal

Your lender will order a home appraisal, and the appraiser will need to make an appointment to come to your home. During their visit, they'll inspect your property as needed to estimate its value. The amount will then be reported back to your lender. 

Closing

If all goes well in the previous steps, the loan will enter closing. You'll need to review and sign all of the loan documents and pay any closing costs that are due. Mortgage refi closing costs typically range from 2% to 6% of the loan amount.

Once the loan is closed, you may enter a right-to-rescind period. "Most primary residence mortgage refinance transactions have a three-day right to rescind between signing loan documents and loan funding," says Ken Sisson, Realtor and associate broker with Coldwell Banker Realty. 

After any right to rescind period ends, the loan proceeds will be disbursed and your original mortgage will be paid off. If you're performing a cash-out refinance, you'll receive the surplus funds left after paying off your existing loan. From there, you'll begin making repayments on the new loan. 

What could slow the refinance process?

A few different factors can lead to a drawn-out mortgage refinance process. 

"The main factor that can impact the transaction speed is responsiveness," says Raul Hernandez, a residential mortgage loan originator at Competitive Home Lending. 

He adds, "With advancements in technology for electronic submission of supporting loan documents, 1-hour underwriting, and electronic delivery of closing documents, the process is faster than ever. However, any delay from the borrower, appraiser, title company, or any other party involved can add days to the closing timeframe."

According to Sisson, a common delay occurs when underwriters run into issues with borrowers' paperwork.

He says, "Very rarely will a refinance be fully approved and cleared to close during the first pass through underwriting, so most refinance files will go through the underwriting department at least twice, sometimes more. The longer underwriting turn-around times are, the longer the refinance transaction will take." 

What could expedite the refinance process?

With an understanding of what slows the process, how can you expedite it?

"The best advice for expediting the loan process is to work closely with the loan officer and loan processor and be responsive," says Hernandez. "Submitting required loan documents after hours, on the weekend, or days after the lender's initial request will delay the process. This is especially true when there is a federal holiday to account for during the processing period."

It also helps to ensure your paperwork is clear and organized. 

"If there's some documentation that is confusing in some way, or not straightforward, that could cause more passes through underwriting. It's best to supply exactly what is requested and nothing more or less," Sisson says. 

Mortgage refi timeframes can vary so ask around

While 30 to 45 days is considered a common timeframe for mortgage refinancing, processing times can vary greatly depending on the lender you choose, the type of loan you have and the current state of the market (hot or cold). 

You can get a better idea of what to expect by asking potential lenders for estimates on how long they're currently taking to complete mortgage refinance loans. 

Quicken Loans can guide you through the process now!