How long does it take to refinance a house?
How long does it take to refinance a house? Normally on average, it would take between 30 to 45 days to complete the process of refinancing a mortgage. Now that we are still enduring a pandemic, it could possibly take a longer time.
To refinance a house, there are quite a few steps for you to be prepared. Few experts said that there have been minor changes to the refinancing process due to the coronavirus hit. Now, here are the steps for the process;
Firstly, what are your financial goals? This is the first step of refinancing that you should take, as it is important to exactly know what you are trying to achieve by doing this refinancing process. Some might want to free up monthly debt, while others might just want to switch the mortgage rate.
Secondly, you need to decide which lenders are suitable for you. Also, you need to know and calculate how much equity you have, it’s good if you have knowledge of the value of your home. Then, you will need to decide based on what you are trying to achieve by doing the refinancing process. Compare the rates, requirements, and terms. It’s better to compare rates from multiple lenders. Then, contact the official lender, their representative will provide you information that you need and they will also gather your information through phone or any electronic devices. Plus, they will instruct you on how to apply to the lender. A credible lender usually provides transparency into the lender fees, it includes appraisal fee, credit report fee, loan origination fee, title search, insurance fee, and underwriting fee. These lenders’ fees are the most common ones and you’ll need to investigate carefully whether the lender states these fees or not. Small differences in the rate fees could add up to thousands of dollars.
Third, you have to prepare the paperwork. If you have decided which lender is suitable for you, then you have to make sure that you have all your paperwork ready by the time you apply. The lender needs to verify your assets, income, liabilities, home value, and credit. There is going to be a lot of paperwork involved, so you need to prepare income and tax documents beforehand. This might help you massively. Additionally, you might want to prepare your debts. Any debts that are not available on your credit score, will need to be reported all of these. Don’t forget that you’ll need documents of proof of assets and proof of insurance. Also, note that you might have to request a copy of these documents, such as tax returns. Be sure that you’re not missing any documents. Otherwise, the process will take longer due to the lack of documents that you need to submit to the application.
Also, don’t forget to prepare for the appraisal. Now, you may or may not require an appraisal for the process, there are some circumstances that you don’t have to have an appraisal. Especially in these times of COVID-19, and it could be done through online streams. But it’s better for you to be prepared beforehand. Moreover, many lenders still require an appraisal to determine the value of your house. It could have a big impact on how much equity you have. So, it’s better to be prepared for an appraisal if you are required to. Usually, appraisal fees range between $300 to $500.
Next, you need to fill in the application form. Note that some banks probably will open in limited hours, so you might have to complete the application online.
Now, if you have filled out the application form, it is time for you to wait for the process of processing and underwriting. This is the process of the lender and its underwriting team to analyze your application based on the information that you have provided and determine whether you are a suitable candidate for refinancing, then they will approve your application. If you are qualified, they will also tell you how much that you could borrow.
Finally, before you close the loan and receive the fee, you’ll need to lock in your interest rate. So, How long does it take to refinance a house? Its period may vary from 30, 45 to 60 days. Then, your lender will send you documents regarding the disclosure of the loan. It includes details such as closing fees, then you’ll need to sign another closing loan document.
While these are the steps for refinancing and counting the approximate time that you’ll need in order to get through the process, there are some ways to speed up the process. Other than doing your own research on the lenders and preparing all the documents required.
Firstly, you can check your own credit score. If you know the score of your credit, it’ll make you a better understanding of which mortgages are suitable for you. Thus, speeding up the process of deciding on which lenders that are available.
Then, you’ll need to double-check for any errors or mismatches in any of your reports. An error could affect the status of your score and interest rate. In addition, try not to apply for any new lines of credit before you apply for a mortgage. Applying for new credits during the process of applying for a mortgage will reduce your credit score, thus reducing the chance of approval for the application process. It’s better for you to wait for the current applying credit process than you apply for a new one.
How long does it take to refinance a house? If somehow you had a gap in employment in your report without any explanation, you have to write a letter to explain it. As it might cause the lender to question whether you have stable financial or that you are able to make your payments on time. You’ll also need to explain your credit blemishes. Write and explain your late payments, collections, or charge-offs if there are any, and explain how did you take the steps to resolve those problems. This is also helpful for the lender as it indicates your current financial situation, and makes sure that those problems will not occur again.