How long does it take to refinance a house?

Refinancing a home can help you meet specific financial goals, but it’s natural to wonder how long the process will take.

Exploring the refinancing process and how long it should take to refinance a house could help you determine if it can benefit you.

How long does a refinance take?

A refinance takes 30 – 45 days to complete in most cases, but it could always require more or less time depending on a variety of factors. Processes such as appraisals, inspections and other services that third parties handle could slow down momentum. Your finances and property size can also impact the timing of a refinance.

Depending on the situation, a refinance may change your interest rate, the length of your loan, monthly payment and other factors. The funds from your refinance pay off your original mortgage after your closing. After that, you make payments on your new loan.

How long after a refinance do you get money?

The Truth in Lending Act (TILA) requires a 3-day grace period after a loan closes for you to cancel the refinance. Once the grace period ends, lenders usually provide funds within 3 – 5 business days.

Ways to speed up the refinance timeline

You can take various steps to shorten the refinance process. Here they are.

Make sure you qualify

Like qualifying for your initial mortgage, qualifying for a mortgage refinance involves proving to a lender that you can afford to make your new mortgage payments. Below are some of the financial factors that lenders keep in mind.

• Your credit score: You must meet credit standards before you can refinance your loan. Check your credit score and make sure you have a FICO® Score of at least 620 to refinance into a conventional loan. If your credit score is lower, learn more about refinancing with bad credit.
• Your home equity: Most lenders won’t loan you more than 80% – 90% of your home equity. This restriction means you can only refinance $8,000 to $9,000 for every $10,000 of equity you have in your property. Contact your current lender or loan officer and request a mortgage statement if you aren’t sure how much equity you have.
• Your debt-to-income ratio (DTI): Your DTI is the percentage of your monthly gross income you use to make monthly debt payments. Most lenders like to work with borrowers who have a DTI of 43% or lower. To qualify for as many options as possible, you should reduce your other debts before refinancing if your DTI is above 43%.

Remember, going through a refinance means you must pay closing costs again. Keep in mind that you may lose any financial benefit you’d get with a refinance if you bought your home within the last year. If you’re a Rocket Mortgage® client, we’ll periodically do a mortgage review to make sure your current mortgage is the one that best supports your goals.

Prepare your documents ahead of time

Your lender will ask you for a number of documents when you apply for a refinance. The process is similar to your initial loan application. These documents help your lender verify your income, assets and financial history. Get your documents ready ahead of time to ensure a smoother process.

Some of the documents your lender might ask you for include:

• Your two most recent W-2s or 1099s
• Your two most recent pay stubs
• Your two most recent bank statements from each of your accounts
• Your two most recent tax returns

If anyone else is applying for a refinance on your loan, such as a spouse, your lender will also ask to see their documentation.

If you’re self-employed, your lender may want to see more documentation to prove that your income is what you say it is. Prepare by keeping a copy of your most recent tax return somewhere accessible.

Your lender may ask for any other documentation during the refinance underwriting process. Be sure to respond quickly to keep everything moving along on schedule.

Get ready for your appraisal

Your new lender usually requires a home appraisal when you refinance. Just like when you went through the home buying process, a refinance appraisal tells the lender they’re not loaning you more than the value of your home. However, if you have a Federal Housing Administration(FHA), Department of Veterans Affairs (VA) or U.S. Department of Agriculture (USDA) loan, your lender may waive the appraisal so you can move forward with a no-appraisal refinance.

Ideally, your appraisal will come back for more money than you paid for your home. If your assessment comes back low, you may need to adjust the amount you’re asking for in your refinance.

It’s never too early to begin setting yourself up for a successful appraisal. Here are a few actions you can take during the early stages of your refinance to ensure your appraisal comes back strong:

• Do your research. Local property values influence the amount your property is worth. Do some research and see how home values are trending in your area. Does recent sales data show that local property values have increased? You may want to keep this information handy for the day of your appraisal.
• Keep upgrade documents in order. Permanent upgrades you make to your home increase its overall value. Keep receipts, contracts and permits handy so you have proof of any updates you’ve made to your home since you moved in. This information gives your appraiser a more accurate estimate of your home’s value.
• Spruce up your exterior. Your home’s curb appeal can play a role in its value. Take some time to touch up your yard in the weeks before your refinance. Mow your lawn, consider planting a garden and power wash the sides of your house. Be present when the appraiser walks through your home. Point out any special features and be sure to do some light cleaning the morning they arrive.

Refinance delays out of your control

While you can take steps to speed up your refinance, some factors are out of your control. For example, if the lender is swamped with refinancing requests, it might take longer for you to finalize your refinance as they work with other homeowners.

Another potential snag is if your home appraises for less than expected. If your home appraisal is low, you might not be able to borrow as much as you originally expected. In some cases, you can dispute the initial appraisal value. But that will add to your timeline.

Steps to refinancing your mortgage

As you move forward with applying for a refinance use the following steps to help you prepare.

1. Calculate your home equity. Subtract your mortgage balance from your home’s value to determine how much equity you have in your home.
2. Shop around for a lender. Seek out loan estimates from several lenders to find the best option for your unique situation.
3. Apply for the refinance. When you find the right lender, fill out an application for your loan. 
4. Provide necessary documents. The lender will ask for a range of paperwork about your financial situation, such as proof of income. Organizing your paperwork in advance will help move the process along.
5. Schedule an appraisal. In some cases, the lender requires an appraisal before closing. Try to tackle this as soon as possible to keep things moving forward.
6. Close on the loan. You’ll want to review your loan paperwork and come prepared to pay any closing costs.

The bottom line: Your situation impacts the refinance timeline

You can refinance your mortgage loan to get a lower interest rate, change your term, consolidate debt or take cash out of your equity. There’s no exact time limit on how long a refinance can take. However, most refinances close within 30 – 45 days of applying for the refinance loan.

While lots of refinancing tips can help the refinance process go smoothly, you can take a few steps to speed up the process. First, make sure you qualify before you submit a refinance loan application. While your lender reviews your application, gather all the necessary paperwork and prepare for your appraisal.

Don’t forget to review your personal goals, interest rate and home equity to make sure it’s the right time to take this step. It’s best to speak with a licensed financial expert or advisor before making any major financial decision.

Once you’re ready, you can start the refinance process online with Rocket Mortgage.