A refinance of your homeâs mortgage could lead to big savings. With lower interest rates, itâs possible to save thousands over the lifetime of your loan.
You might be drawn in by the potential savings, but you might find the paperwork and verification process that come with refinancing your house to be less appealing. Let’s discuss the length of time it takes to refinance a mortgage and some suggestions for accelerating the procedure.
Refinancing your mortgage can be a great way to save money on your monthly payments, but the process can be frustratingly slow. In recent years, the average time to refinance a mortgage has increased significantly, from around 45 days in 2010 to over 90 days in 2022. So, what’s causing these delays?
There are several factors that contribute to the long wait times for mortgage refinances These include:
- Increased demand: With interest rates at historic lows, there’s been a surge in demand for refinancing. This has led to a backlog of applications at lenders, who are struggling to keep up.
- More stringent lending standards: The financial crisis of 2008-2009 led to a tightening of lending standards. Lenders are now requiring borrowers to have higher credit scores, lower debt-to-income ratios, and more equity in their homes. This can make it more difficult for some borrowers to qualify for a refinance.
- Increased paperwork: Lenders are now requiring borrowers to provide more documentation than ever before. This can include pay stubs, tax returns, bank statements, and investment account statements. The increased paperwork can add to the processing time for a refinance.
- Understaffing: Many lenders have been forced to lay off staff in recent years. This has led to a shortage of loan officers and other staff who are needed to process refinance applications.
- Flood of home buying applications: With mortgage rates still historically low, there’s been a surge in home buying demand post pandemic. This is a huge positive for the economy. The Federal reserve has promised to stay accommodative. And with Biden as President, he has promised to unleash trillions more in stimulus aid.
- Negative Real Mortgage Rates: Mortgage rates have come up from their 2020 bottom, but they are still quite low. In fact, real mortgage rates are now negative given inflation is much higher than the average 30-year fixed rate mortgage.
What Can You Do to Speed Up Your Refinance?
If you’re planning to refinance your mortgage there are a few things you can do to speed up the process:
- Shop around for the best rates: Get quotes from multiple lenders before you choose one. This will help you ensure that you’re getting the best possible rate.
- Gather your paperwork in advance: The more documentation you can provide upfront, the faster your lender will be able to process your application.
- Be patient: The refinance process can take some time, so be prepared to wait a few weeks or even months.
While the refinance process can be frustratingly slow, it’s important to remember that it’s worth it in the long run Refinancing your mortgage can save you thousands of dollars over the life of your loan So, if you’re thinking about refinancing, be patient and do your research. With a little effort, you can find a great rate and save a lot of money.
Frequently Asked Questions
How long does it typically take to refinance a mortgage?
The average time to refinance a mortgage is currently around 90 days. However, the actual time can vary depending on a number of factors, including the lender, the borrower’s financial situation, and the complexity of the loan.
What are the most common reasons for delays in mortgage refinancing?
The most common reasons for delays in mortgage refinancing include increased demand, more stringent lending standards, increased paperwork, understaffing, and a flood of home buying applications.
What can I do to speed up my refinance?
There are a few things you can do to speed up your refinance, including shopping around for the best rates, gathering your paperwork in advance, and being patient.
Is it worth it to refinance my mortgage?
Refinancing your mortgage can save you thousands of dollars over the life of your loan. So, if you’re thinking about refinancing, be patient and do your research. With a little effort, you can find a great rate and save a lot of money.
Additional Resources
- Quicken Loans: How Long Does It Take To Refinance A House?
- Financial Samurai: Why Does It Take So Long To Refinance A Mortgage?
Disclaimer
I am an AI chatbot and cannot provide financial advice. The information provided above is for general knowledge and informational purposes only, and does not constitute professional financial advice. It is essential to consult with a qualified financial advisor for any financial decisions or before making any investment.
Why Is My Refinance Taking So Long?
You should expect it to take at least a few weeks to close on your refinance. That being said, some refinances can take longer. It all depends on your situation and the circumstances impacting loan applications in your area.
Hereâs a closer look at the main reasons why a refinance can take longer than you expect:
The government has strict rules surrounding the refinancing process, and those regulations may cause friction throughout the process.
Should your desired refinance not meet the requirements outlined in the regulations, it may take longer or not be possible to finish.
A critical piece of the refinance process is the new appraisal value. The lender will use the new appraisal value to make decisions about your refinance. In the event that the appraised value is less than anticipated, the refinancing process may be delayed if you are unable to obtain the loan.
If you’re worried that your home’s recent appraisal won’t be as high as you had hoped, think about spending some time improving the curb appeal of your exterior. Additionally, it doesnât hurt to tidy up the house before the appraiser comes by. Finally, take the time to walk through your home with the appraiser to emphasize any important features.
Your credit score helps lenders determine whether to proceed with the refinance process. If you have a bad credit score, then you may not qualify for a better interest rate. Unfortunately, most lenders will need borrowers to have a fair credit score to approve the refinance.
What You Can Do To Speed Up Your Refinance
Want to speed up your home refinance? Here are some helpful tips to help you move forward quickly: