When you have a mortgage, the first fifteen years of repayment go towards interest, while you will handle only a portion of the principal balance. If you wish to avoid this problem, we recommend you refinance, which is a common solution for people who wish to lower the monthly mortgage payment and interest rate throughout the loan’s life.
At the same time, if you wish to boost a home’s equity, we recommend you refinance the mortgage, which will provide you peace of mind. The main question people ask is how long does the process take? You should check here to learn more about refinancing processes.
According to experts, the average time to refinance a home is between one and two months, depending on numerous factors. Although this is an average, it can go up or below, which is vital to remember.
Throughout the refinancing journey, you should understand the entire process, which will help you prepare yourself. The main goal is to handle the right steps towards the end of the process, which will provide you with a comprehensive understanding of how to refinance a household, speed up the process, and get the most out of it.
1. Research Different Lending Institutions
Similarly, as with any other financial decision, it is vital to conduct research beforehand. You can find a wide array of lending institutions available both online and in person. Since you are a prospective customer, you can choose an institution that works in your best interests.
Therefore, you should consider these factors when choosing the best course of action:
- Reviews and testimonials
- Customer service
- Communication
- Terms, conditions, and interest rates
- How long do the refinance processes usually last
When searching for the best lender, we recommend you talk with the current one because they already have your personal info, which is the easiest way to speed up the process. At the same time, the current lender may offer you lower fees, and interest rates, while some of them may even cut the closing expenses.
If you wish to streamline the process, we recommend you make a spreadsheet of each lender you decide to contact.
Note their information, rates, and other relevant info too. Loan officers should provide you with the answers to questions such as whether you should refinance after the interest rate drop and the type you should choose based on your financial situation.
Remember that the time frame required for the process depends on your preferences and needs. Therefore, you can spend searching for a few hours or a few weeks.
2. Application
The moment you find a lending institution, the next step is completing the loan application. The process takes a few hours, and if you gather relevant paperwork and organize it thoroughly, they can expedite you as soon as possible.
The main goal is finding a reliable loan officer to ensure this process is seamless, while you will get a guide to gather the documentation you need to complete every step along the way.
Documents you need to complete the application are:
- Insurance – You should provide homeowner insurance as well as title
- Proof of Income – You will also need tax forms such as 1099 and W-2, retirement account statements, tax returns, bank statements, and pay stubs.
- ID Information – Birth certificate, Social Security number, phone number, email address, driver’s license
- Credit Info – Report and score
- Debt Statement – Car payments, student loans, credit card statements, and info about current mortgage
3. Estimation
As soon as you decide to submit a loan application, a lending institution will have three business days to offer you an estimate. Remember that the estimate is not rejection or approval but will offer you relevant info you should know after approval. We are talking about:
- Closing expenses
- Monthly installments
- Interest rate
- Insurance and tax expenses
- Prepayment penalties
- Negative amortization
After analyzing and reviewing the estimation, you can decide whether you wish to choose that lending institution or not. Remember that all lenders will use similar estimation forms, meaning you can compare the conditions and terms from different options beforehand.
4. Home Appraisal
In specific cases, lenders will require a home appraisal, especially in case of mortgage replacement. In most cases, old homes will receive appraisal since the equity and home value have increased significantly from the last time you took a loan. At the same time, home value depends on numerous factors, including neighborhood, curb appeal, and inflation.
On the other hand, new homes do not require appraisals. Generally, the process will help you determine how much your house is worth, meaning you should make it look as appealing as possible beforehand.
Getting a lousy appraisal will affect the terms and conditions, which is important to remember. If you wish to speed up the process, we recommend you do it as soon as possible. Still, you should prepare for any expenses. Home appraisals cost between three and four hundred dollars.
Still, the cost will increase depending on numerous factors, including the size and area you reside. Additionally, some government-backed mortgages, such as FHA, VA, and USDA, do not require an appraisal, which is important to remember.
5. Underwriting
The longest step throughout the refinancing process is underwriting, which requires between five and eight days, depending on numerous factors. The best way to handle this step is by letting go and being patient because you cannot do anything on your side.
During the process, a lending institution will check out your financial situation and history to determine whether you can get a new mortgage, afford the payments created in estimation and handle each step along the way.
They will also review additional info required for the process, including credit reports, scores, assets, bank statements, home appraisal results, income, and debt. If you wish to ensure this step goes quickly and smoothly, we recommend you gather relevant paperwork and submit everything by filling out the applications and ensuring overall accuracy.
This will help you ensure the underwriting process is faster than it should, which will prevent prolonged waiting. We recommend you to enter this site: Refinansiere.net/ to learn more about refinancing before making up your mind.
6. Analyze Closing Disclosure
You will get a closing disclosure as soon as the lending institution finishes with the underwriting process. The disclosure is the final form that will include expenses and fees you should handle during the closing process. It also features information about a new loan, including the APR, monthly installment, and many more.
Remember that you should review and analyze closing disclosure comprehensively, which will prevent unnecessary surprises from happening.
7. Closing
The final step is closing the new loan. After analyzing and reviewing the terms and conditions, if you are happy with the results, you should close the process by signing on the dotted line. That way, you will make the process official.
The closing meeting will require a few hours, during which the lender will explain to you the terms and conditions of the contract.
How Long Does It Take to Refinance a Mortgage?
As you can see from everything mentioned above, you will need between one and two months to refinance the entire household. Still, the process can depend on specific and individual factors such as your communication, organization, and lender.
For instance, if your goal is to speed up the process and reach the different terms, rates, and monthly installments as soon as possible, you can use specific strategies to boost and speed up the process.
The first thing you should remember is that staying organized is crucial for ensuring seamless underwriting and other processes. Missing a single document or failing to fill each line on the application will cause unnecessary delays that will affect the time frame.
Communication is crucial, especially if you wish to ensure you get everything in a timely manner. Most of us have been on numerous deadlines, meaning you should offer relevant information which will ensure the process becomes seamless. Make sure to reply to all calls, texts, and emails as soon as you receive them.
Lending institutions vary when it comes to appraisal and underwriting, which is why you should find the one that will process the refinance as soon as possible. It is important to make sure that terms and conditions are favorable and as agreed upon. Some lenders will try to push lousy terms for handling everything on time.
You should be punctual and thorough while analyzing the contracts. People who wish to ensure that everything is as smooth as possible are more likely to find an attorney who can represent them during negotiation.
Remember that signing documents and disclosure properly is essential. Everything depends on the steps for refinancing, but you will receive the bulk of the paperwork you must sign to finalize the deal. The faster you read, the faster you will sign and send back the forms. That way, you can speed up the entire process.
Remember that unexpected expenses can affect your plans altogether. If you wish to avoid this situation, you should understand everything about expenses that come with refinancing, including closing fees, credit reports, home appraisal, attorney, and underwriting fees.
