How Long Does It Take To Refinance A House?

There are many reasons you might be thinking of refinancing your house. A lower monthly payment, a better interest rate or taking out some of the cash you have built up by borrowing on the equity in your home are a few of the most common reasons.

Whatever the reason, once you decide refinancing is the way to go, the next logical question swimming around your head is probably, "How long does it take to refinance a house?"

How Long Does A Refinance Take?

The timeline to refinance a house depends on several factors, but it generally takes 30 – 45 days. Some variables that can affect the timeline include an individual state’s specific laws, closing and insurance requirements, appraisals and possible complications with the property title.

What Happens In The Refinance Process?

Refinancing a house can be broken down into four major categories:

1. Initial refinancing approval
2. Appraisal
3. Underwriting
4. Closing

Let’s take a closer look at each of these steps, including the usual amount of time each step takes.

Apply For Initial Approval: 3 – 5 Days

Much like when you bought the house, refinancing requires a review of your finances. You will self-report income history, credit score, assets, employment and more to enable the loan officer to give you initial approval to refinance your home.

Get Your House Appraised: 7 – 14 Days

Next, the lender will order an appraisal of your home to ensure it’s worth the amount indicated in your refinance initial approval. This is similar to the appraisal your lender ordered when you bought your home but can sometimes be a little less extensive. In fact, sometimes the appraiser can implement a desktop appraisal and doesn't even need to visit your house.

Go Through Underwriting: 7 – 21 Days

The initial approval of your refinance was done with information you reported to your lender, so that all needs to be verified by a third party. This third party is called underwriting. You may remember this from when you originally purchased your home. The broad timeframe here is due to a number of possible delays, including your timeliness with getting information to the underwriter and their timeliness researching and getting back to you.

Close On Your New Mortgage: 3 – 5 Days

Once you get to this step in the refinancing process, most of the work is done. Underwriting has reviewed everything, approved your refinance loan and all that’s left is a lot of signing.

The lender and a notary will oversee the process that will include paying off your old mortgage and replacing it with the new one. If you get cold feet after signing, don’t worry, there is a 3-day grace period when you can still back out.

In addition, if a cash-out is part of your refinance, this is the time when funds get moved to an account of your choice and you can start spending!

How To Speed Up The Refinance Timeline

If you are looking at these timelines and hoping for a quicker home refinance process, here are a few tips for speeding things up.

Have Important Paperwork Organized

Get your paperwork together ahead of time so you don’t waste time looking for it during the home refinance process. This includes:

• 2 months of pay stubs
• 2 months of bank statements for every account
• W-2s, 1099s and other tax documents from the past 2 years
• Tax returns from the past 2 years
• Homeowners insurance policy

Know Your Credit Score

Your credit score is one of the most important factors for refinance approval and for determining the interest rate on your new loan. The higher your score, the better your loan terms will be. To make sure your score is as low as it can be before you get into home refinancing, you should:

• Keep bills current and on time.
• Pay down loan balances.
• Keep current credit streams open.
• Avoid opening new lines of credit.

Lower Your Debt-To-Income Ratio (DTI)

Your debt-to-income ratio is another factor that can have a big impact on a mortgage refinance. This equation compares your gross income each month and the amount of debt payments you make each month. The lower your ratio, the less debt you have in relation to your income. As you might guess, a lower DTI means you are more likely to get approved for refinancing.

Plan For Closing Costs

Start saving for your closing costs if you can. However, you will usually have the option to either roll the closing costs into the loan or pay the closing costs out of pocket.

Order A Title Search

A new title search will be necessary to ensure there are no liens or encumbrances on the home. Doing this ahead of time will speed things up when you are ready to refinance.

Prepare For Appraisal

As mentioned above, an appraisal will need to be performed before a refinance loan can be approved. The more the home appraises for, the more you can borrow, so consider some of these steps prior to refinancing to get the most money you can.

• Make sure it complies with local safety codes. A few things to check on are smoke alarms, carbon monoxide detectors and electrical wiring.
• Make sure it complies with zoning laws. Running a commercial business in a residentially zoned area? Dig into the legality of things like this and other possible zoning violations before refinancing.
• Provide documentation of upgrades. Be sure to present documentation about any improvements/upgrades to the appraiser, as they may increase the overall value of the home.
• Spruce up the exterior and interior. First impressions are critical, even with a trained appraiser. A little touch-up to the yard and a fresh coat of paint can go a long way. 
• Consider an appraisal waiver. In some cases, your lender can get an appraisal waiver, depending on a number of factors including the amount you are looking to borrow. Look into this, as you may be able to avoid the uncertainty of an appraisal.

Is Now The Right Time To Refinance?

The right time to refinance depends on your specific situation. That said, here are a few factors to consider before jumping in.

Are Current Interest Rates Favorable?

Refinancing usually makes sense when a borrower can get a lower interest rate than the rate of their current loan. If interest rates are considerably higher than when you bought your home, it might not be the best time to refinance.

Is There Solid Home Equity Status?

The equity in your home is the amount of money it is worth, minus what you owe on your mortgage. Having a lot of home equity is beneficial in refinancing because lenders use your home as collateral for a loan and also look at your DTI. The more your home is worth and the less you owe on it, the better the loan terms will be.

Need Money For A Major Purchase Or Project?

A cash-out refinance is a great way to leverage the equity in your home to get some cash relatively quickly. Since the value of the home is so critical, a more in-depth appraisal is needed, so it could take longer to approve than a traditional refinance.

You can use the cash you get from a cash-out refinance on anything you want, but if you use it to make home improvements, you will be increasing your equity even more and you may even get some tax considerations.

The Bottom Line: Refinancing Doesn’t Have To Take Long