While typically refinancing a mortgage can take anywhere between two to four weeks, there are a number of factors that have to do with the process itself that could drag the timeline out weeks more or even months. To get a firmer grip on the timeline, it is important to review the steps involved and remember that it is both your and your lender’s responsibility to ensure everything is in place so that the process can go smoothly.
Finding a Broker
Finding a broker, and by extension a suitable lender, is crucial and can take quite a bit of time. Before approaching a broker it is important to have your priorities straight and focus on the rates and terms of the loan they can provide—which go beyond the surface level lowest interest rate and account for penalties, fees and home equity options. The quicker you settle the terms, the sooner you can begin the refinancing.
You will, of course, need all the relevant documentation to submit a complete application, so having all your documentation on hand and at the ready can speed things up considerably; this includes the loan application itself, details of your current mortgage, personal information and tax returns. Another thing that will be required is the credit score. If yours is low, take some time to build it back up to ensure things go off without a hitch.
You will need to schedule an appraisal of your property during the refinancing process. Doing this sooner rather than later is a key determinant of timeline, as it plays a big part in the mortgage itself and are an essential piece of information for your broker. Most appraisals except you to pay the bill, but there are instances where your broker will cover the expenses, depending on your loan and credit score.
Underwriters assess your finances and home equity in comparison with the loan amount requested. With the advances in technology, the process is in part performed by a computer, which does speed up the process. However, it is again important to have all the appropriate documentation at the ready, such as your monthly income, bank statements and credit history.
The exact time to refinance a mortgage depends on your case: current financial situation and size of loan. You can play your part by having all the documents ready, and maintaining diligence and efficiency throughout the process. Speak to your mortgage broker for more accurate timelines and ways to avoid typical bottlenecks.