How long does refinancing take?
December 10, 2013
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When the economy changes, interest rates fluctuate with it. Over the past few years, mortgage rates have experienced volatile transitions to their historic lows, spurring many homeowners to apply to refinance their loans. With lower interest rates worked into loan terms, it is possible to have low cost mortgage. However, there are additional costs that come with refinancing a home and the process can take more time than many homeowners anticipate.
Applying
The first step for homeowners to take is to apply for refinancing. This will typically happen when mortgage rates are reduced with the goal to lower their monthly mortgage payments. Applications can include a lot of information such as credit reports, tax reports and job and income verification, as well as history about the property. Having a complete and accurate application can reduce delays from a lender needing more information.
The first step for homeowners to take is to apply for refinancing. This will typically happen when mortgage rates are reduced with the goal to lower their monthly mortgage payments. Applications can include a lot of information such as credit reports, tax reports and job and income verification, as well as history about the property. Having a complete and accurate application can reduce delays from a lender needing more information.
Underwriting
Once a mortgage refinance application is submitted, the underwriter will use the information and run a credit check. They will confirm tax records and employment status, calculate what is affordable and check to see if the borrower will meet the lender's requirements. An application is either approved or rejected by an underwriter and the process cannot be closed without approval. If an underwriter requires more information, such as other bank statements, the process could take more time.
Once a mortgage refinance application is submitted, the underwriter will use the information and run a credit check. They will confirm tax records and employment status, calculate what is affordable and check to see if the borrower will meet the lender's requirements. An application is either approved or rejected by an underwriter and the process cannot be closed without approval. If an underwriter requires more information, such as other bank statements, the process could take more time.
Appraisal
Getting an appraisal often takes the most amount of time in the refinancing process. Not all refinances will require an appraisal, although a bank or lender may request one. To conduct an appraisal, a homeowner must hire a professional to assess the value of the property. A higher appraisal can be beneficial for homeowners by raising the equity of their home.
Getting an appraisal often takes the most amount of time in the refinancing process. Not all refinances will require an appraisal, although a bank or lender may request one. To conduct an appraisal, a homeowner must hire a professional to assess the value of the property. A higher appraisal can be beneficial for homeowners by raising the equity of their home.
Closing
After considerations like the appraisal have been completed and a borrower has met the lender's requirements according to an underwriter, the mortgage refinance can close. New loan terms can come with fees that run in the thousands of dollars, so borrowers need to take this into consideration when applying. If there isn't a lot of time left on a loan, refinancing may be costlier than leaving the interest rate as is.
After considerations like the appraisal have been completed and a borrower has met the lender's requirements according to an underwriter, the mortgage refinance can close. New loan terms can come with fees that run in the thousands of dollars, so borrowers need to take this into consideration when applying. If there isn't a lot of time left on a loan, refinancing may be costlier than leaving the interest rate as is.
VA loan refinance
For eligible veterans who already have a VA home loan, refinancing is a little different than doing so with other types of loans. With a VA Interest Rate Reduction Loan, veterans can decrease their monthly payment by getting a reduced interest rate. Similar to other refinancing options, a VA home loan can be changed from an adjustable-rate mortgage to a fixed rate. When switching to a fixed-rate mortgage, it is possible the interest will increase.
For eligible veterans who already have a VA home loan, refinancing is a little different than doing so with other types of loans. With a VA Interest Rate Reduction Loan, veterans can decrease their monthly payment by getting a reduced interest rate. Similar to other refinancing options, a VA home loan can be changed from an adjustable-rate mortgage to a fixed rate. When switching to a fixed-rate mortgage, it is possible the interest will increase.
What is most beneficial for a lot of veterans is that refinancing a VA home loan can be done without any out-of-pocket costs, unlike other options. Instead, closing costs and other fees are adjusted into the new loan terms, either through a higher interest rate or included in the overall amount of the loan.
These options are only available for those who have used their VA home loan eligibility on a property. No other types of loans are allowed to use this option. A veteran also only needs to prove they occupied the residence at one time before applying for refinancing.
Contact the Federal Savings Bank, a veteran owned bank, to explore find the best mortgage refinance rates.
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