How long does it take to refinance a house?

Refinancing is a common practice for homeowners. You might want to refinance when interest rates are better, or you might need to adjust your loan terms. Maybe you need some extra cash for renovations and want to take a cash-out refinance. But how long does the process take, and what do you have to do to ensure everything goes smoothly?

In this article we’ll go over how long refinancing usually takes, what to do to make sure everything goes as it should, and what hiccups you might run into.

Key takeaways

• Refinancing usually takes 30 – 50 days, followed by a 3-day grace period before you get your money in 3 – 5 business days.
• You can minimize delays on your end by making sure you qualify beforehand, having your paperwork in order, and preparing for your appraisal.
• Administrative delays and unexpectedly low appraisals can cause also cause delays.

How long does refinancing take?

Most of the time, you can expect a refinance to take 30 – 50 days to complete. This is the average though, and with so many moving pieces in a refinance, you must be prepared for possible delays.

You can avoid some delays by having all your paperwork in order and responding to any requests quickly, but other things are out of your hands. Appraisals, inspections, other third-party services, and lender workload can also contribute to a longer timeline.

Different loan types can affect the refinancing timeline. For example, Federal Housing Administration (FHA) and Veterans Administration (VA) loans can take a bit longer than conventional loans on average due to them being backed by the government and having different regulations.

Steps to refinancing a mortgage

You might be wondering why it takes so long to refinance a mortgage when you already have one. Here are some of the steps you’ll take when applying for a refinance.

1. Determine how much equity you have: Your equity is the balance of your mortgage from your home’s value. You can also ask your lender for a mortgage report.
2. Choose your type of refinance: There are several types of refinances available, so review your options and find one that works for you.
3. Compare lenders: You don’t have to stick with the same lender for a refinance, though you certainly can. Shop around and find a lender with the best rates.
4. Gather your documents: We’ll give you a list of what you’ll need a bit later in the article, but you’ll want to provide a comprehensive review of your finances.
5. Apply for the refinance: Fill out the application and submit it to your lender. Once it’s out of your hands, this is when the clock starts. Expect the underwriting process to take much of the time we talked about from when you submit the application to when you close on the refinance.
6. Schedule an appraisal: Some types of loans and some lenders will require an appraisal. Schedule this early to avoid any delays.
7. Close on the loan: Review the final documents carefully before signing. Then you can expect your funds 3 – 5 business days after a 3-day grace period.

Ways to speed up the refinancing timeline

Though the unexpected can always happen, here are ways to minimize surprises and speed up your refinancing timeline.

Make sure you qualify

When it comes to a refinance, you can expect similar qualifications as to a first mortgage. Here are some of the financial factors you want to consider

Your credit score

Your credit score should be at least 620. However, some people refinance their home exactly because they are in financial trouble. Maybe they need lower monthly payments, or maybe they need a cash-out refinance to pay off high-interest debt. There are ways to refinance with bad credit, though it might be more complicated.

Your debt-to-income ratio

Your debt-to-income ratio (DTI) shows you how much of your monthly gross income goes to paying off monthly debts. Most of the time, you’ll want a DTI of 43% or less, as much more than that suggests you might be struggling to get by. You might need to pay off some of your smaller debts before tackling a refinance.

Your current finances

You need to prove to the lender that you have stable income for your monthly payments and sufficient cash on hand to pay closing costs. Most homeowners pay an average of $5,000 for a refinance, so you’ll need that ready in addition to proof of income.

Your home’s equity

When it comes to a refinance, you’re unlikely to get more than 80% – 90% of your home’s equity. If you’re not sure how much equity you have, contact your current lender and request a mortgage statement.

Prepare your documents ahead of time

Be proactive. Have all necessary documents in order and be prepared to provide additional proof of income, assets, and financial history as necessary. Missing paperwork is a common reason for delays in just about anything.

Your lender will most likely ask for the following documents:

• Two most recent W-2s or 1099s (if you’re self-employed or own a business, you’ll want to provide clear evidence that your income is what you say it is)
• Two most recent pay stubs
• Two most recent bank statements (if you have multiple accounts, provide this for each)
• Two most recent tax returns
• Your co-applicant’s documents if applying with someone

Get ready for your appraisal

An appraisal tells you how much your house is worth, which will ideally be more than it was worth when you bought it. You’ll probably need a refinance appraisal. However, some kinds of loans don’t require these. If you have an FHA, VA, or U.S. Department of Agriculture (USDA) loan, you might be able to have a no-appraisal refinance.

Tips for a successful appraisal

To make sure your appraisal goes smoothly and you get a number you want to hear, there are some things you can do in advance.

• Do your research. Look into the local market. What have homes near you and similar to your own been valued at in recent months? Take careful notes and save your evidence, as it might help if your appraisal comes in low.
• Keep upgrade documents in order. Home renovations can increase a home’s value. Keep track of any upgrades you’ve had done over the years. This will let the appraiser know what you’ve changed since it was last appraised.
• Spruce up your exterior. Not only should you try to clean up the interior of your home a bit, but you should work on your curb appeal. Mow your law, plant a garden, wash the house, and clean the gutters.

Refinancing delays out of your control

Delays happen. We can’t always avoid all of them, so be prepared for delays beyond your control.

Administrative delays

If you’ve ever been swamped at work, you know that not everything gets done quickly all the time. Lenders can face delays, too. If you’re refinancing during a particularly busy moving season, your underwriter might have a backlog. All you can do is be patient and understand that these things happen.

The appraiser or inspector, if one is needed, might also have a packed schedule or be delayed. You also might live in an area with limited third parties available to do these tasks.

Appraisal is lower than expected

Sometimes an appraisal comes in below what you anticipated, which can severely impact your refinance because you can’t borrow as much as you thought you could. If you want to dispute your appraisal, this will delay your timeline.

An appraisal dispute is called a “reconsideration of value” (ROV). Your lender should be able to help you with how to handle this.

FAQ

If you have further questions about how long it takes to refinance a home, or refinancing in general, here are some topics that come up frequently.

Is it hard to refinance a house?

How difficult it is to refinance a home depends on your individual financial circumstances. If you have a poor credit score or can’t provide proof of stable income, you might have more trouble than someone in good financial standing.

Does refinancing hurt your credit?

Because a refinance requires a hard credit pull and is a request for more credit, you can expect a temporary dip in your credit score. This will usually only impact your score for a year.

When can you refinance a house after buying it?

In order to refinance a home after buying it, most types of loans require you to have been paying your mortgage for at least 6 months. Speak to your lender if you unexpectedly feel you need to refinance earlier than that.

How long after refinancing do you get money?

After your loan closes, the Truth in Lending Act (TILA) requires that you have a 3-day grace period to cancel the refinance if you change your mind. Once that time is up, you’ll be paid within 3 – 5 business days.

The bottom line: Your situation impacts the refinancing timeline

While most refinances take about 30 – 50 days, the reality is that it will vary depending on both your personal situation and outside circumstances. Be prepared to wait longer, but don’t be surprised if it takes less than a month. Have your documentation in order and make sure you qualify before applying to speed up the process on your end.

If you think you’re ready to refinance, start the application process today with Rocket Mortgage^®.