How Long Does a Refinance Take? 8 Ways to Speed Up Your Refi

With rates coming down, you may be considering refinancing to save on your monthly mortgage payment.

You're not alone – when rates fall, loan applications pick up. And when lenders face an increased loan volume, they can take longer to process your refinance.

How long does a refinance usually take, and how can you speed up your closing?

How Long Does a Refinance Take?

Every loan is different, but on average, you can expect a refinance to take 30 to 45 days once you've begun the application process. However, lenders receive more loan applications when interest rates drop suddenly. As the number of homeowners trying to refinance increases, so can mortgage processing times.

Speeding Up Your Refinance

Delays can occur at any step of the lending process; sometimes, they will be out of your control. Fortunately, there are several proactive steps that you can take to minimize issues and speed up your refinance.

1. Know What You Want to Achieve by Refinancing

Begin prepared by knowing exactly why you want to refinance. What goals do you hope to achieve? Some common reasons for refinancing include:

• Lower your rate

• Extending or shortening your loan term

• Cashing out equity to fund home improvements, consolidate higher-interest debt, or put into investment opportunities.

2. Check Out Your Credit Reports

If it isn’t already part of your personal finance routine, request your credit reports and check them for inaccuracies.

By looking things over ahead of time, you can correct errors on your credit reports before applying for your new mortgage. Discovering problems in advance is much better than learning about them from your loan officer during the refinance.

Just remember: it can take a while for the credit bureaus to clear up erroneous records. Before disputing accounts, speak with a lender. Disputes on your credit report can delay your approval.

3. Avoid Large Unverified Bank Deposits

Part of the refinance process involves underwriters looking through two months of your most recent bank statements. This inspection ensures that your finances align with what you reported and that you have enough funds to cover closing costs.

But lenders are also looking for other transactions that could indicate suspicious activity or mortgage fraud. In most cases, deposits larger than half your monthly qualifying income will require an explanation and supporting documentation, which can delay closing.

4. Ask Lenders About Current Processing Times

Before applying with a mortgage company, ask about their current refinance processing times. Some lenders may have a longer backlog than others. This could be because of internal underwriter delays or a waitlist for appraisal reports.

Make sure to get in touch with at least a few different mortgage companies for an accurate idea of how long refinances are currently taking in your local market.

5. Apply for a Streamline Refinance

If the goal of your refinance is to lock in a lower rate or change the length of your loan and you currently have a government-backed mortgage, you may qualify for a streamline refinance.

Available through programs from the FHA, VA, and USDA, streamline refinances can slash closing times by requiring less paperwork and waiving the need for an appraisal.

6. Prepare Required Documents in Advance

Loan underwriters not having all the documentation they need is one of the most common sources of delays during the lending process. To speed up your refinance, make sure to have:

• 30+ days of pay stubs

• Two years of signed tax returns

• Homeowner and title insurance policies

• Records of assets, including bank statements (two months), investment accounts, and real property

Some refinances may require more paperwork than others. If you are self-employed, qualifying with income from non-traditional sources, or have a gap in your employment, your lender will likely have other requests.

7. Receive an Appraisal Waiver

Streamline refinances can speed up closing because they don't require a home appraisal. Thankfully, some conventional refinances can be eligible for an appraisal waiver as well. The bad news is that there’s nothing you or your lender can do to guarantee that you’ll have your appraisal waived.

Fannie Mae and Freddie Mac, conventional loan rule-makers, both use automated underwriting systems to evaluate refinance applications. Computers determine whether you’ll need an appraisal.

Low-risk refinances are most likely to receive appraisal waivers. This could include borrowers with an excellent credit score, sizable equity, and a low debt-to-income ratio.

You may also qualify for a waiver if your home has had an appraisal completed within the past few years.

However, if you're applying for a conventional cash-out refinance, verify that the lender you're working with offers Fannie Mae loan products. Appraisal waivers aren't available on Freddie Mac refinances if you receive cash back at closing.

8. Keep In Constant Contact

Sometimes, human factors can cause a delay in your refinance. It's easy, especially when lenders face an increase in mortgage applications, for files to get set aside for a couple of days while other loans are being processed.

If it’s been at least three days since you've gotten an update from your loan officer, call them to check in and ensure everything is still on track with your refinance. Maintaining constant contact allows you to stay on top of any document requests and address other issues as soon as they arise.

Frequently Asked Questions Regarding How Long a Refinance Takes

Here are a few of the most commonly asked questions regarding how long a refinance takes and the ways you can help speed the process up.

How Long Does It Take to Receive Funds From a Refinance?

If you're withdrawing equity from your home through a cash-out refinance, you usually receive your funds on the fourth business day following closing. That's because federal law gives you a three-day right of rescission – the ability to cancel your new mortgage – on most refinances and equity loans.

What Takes the Most Time During a Refinance?

Delays can happen at any point during the refinance process. However, you're most likely to run into a wait when it comes to loan underwriting and getting an appraisal.

For the fastest refinance possible, apply with a lender with short processing times, have all your documentation ready to submit, and opt for a streamline loan (if you aren't cashing out equity), which doesn't require an appraisal.

How Fast Can a Refinance Be Done?

A refinance usually takes 30 to 45 days to complete, but sometimes, that timeframe can be shortened. By working with a responsive loan officer or mortgage broker, submitting necessary paperwork promptly, and avoiding an appraisal, you might be able to shave a week or more off the process.

Completing Your Refinance as Quickly as Possible

You can't always control how long a refinance takes, especially when rates drop, and lenders get inundated with loan applications. But by following these tips, you can maximize the chances of speeding up your refinance.

Ultimately, the secret to a faster refinance is simply to take action and start the process. If you're ready to refinance, begin today by checking interest rates and processing times with different lenders.