How long does it take to refinance a house?
“Speed” is usually not the first word that comes to mind when you think of the mortgage lending industry. But that’s to be expected when you’re dealing with complex financial processes, rigid industry regulations and comprehensive application review guidelines.
While homebuyers may know from the outset to expect a 30-day or 60-day timeline to close on a new house, refinancing time tables aren’t quite as well-known. How long does it take to refinance a mortgage? Let’s take a peek at the refi process to answer that question, identifying potential roadblocks along the way that might slow down your path to refinance.
How long does closing on a refinance take?
As you may have already suspected, refinancing an existing mortgage can take roughly the same amount of time as closing a loan on a new house. You should expect it to take between 30 days and 45 days to refi from start to finish, although there are some cases where borrowers are cleared to close in even less time.*
On the other side of the spectrum, a typical refi could take up to 60 days to complete, depending on a host of factors like your lender’s capacity to juggle a high loan volume. Worst-case scenario, you may be looking at several months to close on a refinance, but that would involve several extenuating — and pretty unusual — circumstances. For instance, complications arising from the COVID-19 crisis in 2020 often delayed the refinance timeline.
How long does it take to refi?
Plan on your refinance taking anywhere from 30 to 45 days to complete. The clock starts ticking as soon as you submit your refi application.
Refinancing vs. buying: Comparing time to close
At first glance, you might think that a refi would go quicker than a new purchase since you’re dealing with the same piece of property, especially if you’re using the same lender. That’s not always the case, though. In fact, according to a March 2021 report published by ICE Mortgage Technology, the average time to close on refis was actually a full day longer than home purchases: 52 vs. 51.
Looking further back, however, we can see that there are periods when lenders closed refis in a much shorter amount of time. A year earlier, in March 2020, for instance, the average time to close for refis was 10 days fewer than purchases: 35 vs. 45.
How can we explain that discrepancy? Time to close will always be affected to some degree by consumer demand. When more people are submitting refi applications, loan officers have less time to devote to each loan. That can lead to longer refinance timelines when demand is high — even for dedicated lenders with significant resources.
Back in March 2020, mortgage rates temporarily spiked, reaching 3.65%.** Interest rates then steadily dropped throughout the year, and refinancing activity grew in response. Looking at ICE Mortgage Technology’s report, you can see the average time to close for refis increase each month starting in April 2020 and topping out at 59 days in December 2020. That just so happens to coincide with the historical low for mortgage rates.
When the tables are turned and purchase activity dominates lending trends, then you may see the situation reverse: quicker refis and longer home purchase timelines. The availability of appraisers and underwriters also comes into play here. Loan officers may prioritize purchases over refis because the former have contingency clauses that absolutely need to be met. So, when they have fewer resources at their disposal, they may place a greater focus on purchases, leading to longer refinance times.
What impacts refinance timelines?
If your refinance is taking longer than expected, you might start to worry that something is wrong with your loan application or borrower qualifications. But there’s no need to panic just because your refi is dragging a bit. There are plenty of valid reasons for a sluggish refi timetable — and many of them have nothing to do with the quality of your loan application.
- Loan volume: Lenders try to balance speed and diligence when processing a home loan, but even seasoned refi professionals can feel overwhelmed during seasonal peaks. When there simply aren’t enough loan officers, appraisers and underwriters to go around, your refi may take longer to process.
- Lender type: Working with a dedicated mortgage lender has a lot of perks, but one that goes overlooked is specialization. A bank, credit union or other financial institution may offer multiple types of loans and services in addition to mortgages. As such, their workflows may not be as streamlined as a lender that exclusively caters to residential mortgages. And that can mean longer processing times when you’re ready to refinance.
- Loan team size: Smaller lenders may assign a single loan officer to spearhead most refi tasks for you. Meanwhile, a larger lender with significantly more resources can put an entire team on your case. With several lending experts managing their own piece of the mortgage process, loan approval can move ahead at a quicker pace.
As you can see, each of these factors are outside of your control as a borrower. That being said, it’s good to consider these potential issues when choosing a lender for your refi. Smaller lenders may not have the resources to quickly manage spikes in demand or assign a dedicated team to your application. Meanwhile, large banks lack the specialized expertise to work through the mortgage process as efficiently and quickly as a dedicated lender.
What causes the longest delays on a refi?
Some steps in the refi journey are much longer than others, consistently taking a week or more to complete. Although a number of different issues could cause delays, these are the most likely slowdowns you’ll encounter:
- Appraisal: Your lender will want to check the market value of your home before deciding on the terms of your refi. Scheduling, completing and documenting a refinance appraisal can take upwards of two weeks. During the height of the COVID-19 pandemic, these timelines were even longer.
- Title search: Due diligence dictates that lenders check to ensure the title is clear and free of any additional ownership claims, even when working with your existing mortgage provider. Just like with an appraisal report, you may be waiting a week or two — possibly even longer — for the title search to finish.
- Miscommunication: On a well-run mortgage lending team, every person understands the role they play and when they need to act. Communication breakdowns — like, say, neglecting to ask for required documents or forgetting to upload a completed appraisal report — often lead to unnecessary delays.
- Incomplete documents: Failing to provide the necessary documentation, such as financial records, proof of employment and tax returns, will stop the refi process in its tracks. Unlike other issues we’ve discussed, this one usually falls squarely on your shoulders as the borrower.
Steps to refinancing your mortgage: A refi timetable
As we’ve discussed, it can take anywhere from 30 to 45 days to refinance your home under normal conditions. Assuming there are no major hiccups to drag things out longer than the 30-day minimum, what does the refi timetable look like?
|Days 1-2||Submit your application for preapproval|
|Days 3-7||Loan qualification review|
|Days 8-15||Home appraisal|
|Days 16-23||Title search|
|Days 24-29||Conditional underwriting approval|
|Day 30||Clear to close|
How to speed up your refinance
During the refi process, you’ll probably feel like there are long stretches where you have nothing to do but sit and wait for an update from your lending team. That’s not to say you have no agency here, though. Every little bit of due diligence you can manage will help make your refi go more smoothly and speed up the process:
- Prepare required documents: Most refis will require the same collection of documents: bank statements, W2s, mortgage statements, pay stubs, etc. The quicker you can put all of that together, the sooner your loan team can start reviewing your qualifications. Some lenders offer a digital mortgage that can visibly expedite this process.
- Respond to requests quickly: If your loan application is missing important details or supporting documents, your loan officer will have to wait until those information gaps are filled. Don’t wait too long to respond to any requests for additional info or records.
- Follow up with your loan officer: Haven’t heard from your loan team in a while? Don’t be afraid to reach out and check the status of your refi. Staying in touch with your mortgage specialist will ensure your refi stays top of mind.
A refi can take just as long to close as a home loan on a new purchase. Still, depending on the interest rate offered by your lender and closing costs you may need to pay, refinancing your home could be worth the time and energy.
Be sure to check current mortgage rates to see how they stack up to your existing loan’s interest rates. Also, clarify exactly how much you’ll need to pay in closing costs and see if those upfront expenses are worth it. If the math checks out, then take that next step to refinance your house and lower your monthly payments.***
*Owning cannot guarantee that an applicant will be approved or that a closing can occur within a specific timeframe. All dates are estimates and will vary based on all involved parties level of participation at any stage of the loan process. Contact Owning for more information.
**Sample rate provided for illustration purposes only and is not intended to provide mortgage or other financial advice specific to the circumstances of any individual and should not be relied upon in that regard
***Savings, if any, vary based on consumer’s credit profile, interest rate availability, and other factors. Contact Owning for current rates. Restrictions apply.
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