The Average Length of Time It Takes to Refinance a Mortgage
The refinance process might take a few weeks or even a few months to complete.
Refinance loans make it possible for homeowners to lower their mortgage interest rates, consolidate other debts or get cash out of their equity to pay for other endeavors. Because each homeowner has a different financial situation, you can't place an exact time frame on the refinance process. The process requires many different parties to work together from start to finish, creating many variables. However, you can save time by being organized and communicating often with your lender.
When you find the right lender, contact them to get a loan application. Most lenders use the Uniform Residential Loan Application. You probably used this when you applied for the original mortgage as well. Fill it out completely and answer the questions honestly. You need to have your financial documents, such as tax returns and pay stubs, ready to answer some questions. You'll also need to provide copies to the lender to verify the information you provided, so being prepared up front will save time. Your credit history is also collected at this time. The lender typically does this step for you, but you pay the fee in the closing costs.
For conventional mortgage loan refinancing, the lender will require an appraisal of your home to verify the market value. Lenders use local independent appraisers to complete the work. If you live in a larger area, it might take some time for an available slot to open with an appraiser. This can slow down the total time it takes you to refinance. However, the appraised value is usually valid for a few months after it's completed in case you run into any other roadblocks.
Once all of the preliminary information is collected for the application and appraisal, the loan package moves on to the underwriting phase. Although loan officers reviewed the information manually, the underwriting process uses computer software to assess the information and what type of risk you pose as a borrower. The underwriting phase will determine the final approval decision. The lender might determine that you are approved with certain conditions. Generally the conditions include submitting additional paperwork or adding specific coverage to your homeowner's insurance. You will need to meet the conditions before a closing date can be set.
After the lender approves the loan and you've met any conditions, if necessary, the loan is marked clear to close. At this time, the lender prepares all of the loan documents and sets a convenient date for closing. A refinance loan closing is very similar to the closing you attended for the original mortgage loan. As long as there are no errors or mistakes in this step, the refinance process is complete.
How Long Does It Take to Open a Home Equity Line of Credit?
The process to open a home equity line of credit can move very quickly if you are in need of fast funding. Since you are actually monetizing an asset, the loan takes less time for the lender to evaluate and fund. However, you may find a better option if you move slower when sourcing your loan. Ultimately, you will have to choose between speed and price when it comes to getting your home equity line.
What is a Home Equity Line of Credit?
A home equity line of credit is similar to a credit card; it is a revolving balance of very flexible financing. You will have a limit based on the amount of equity you place as collateral with the lender. At any given moment, you can spend up to that limit. You will be required to make minimum monthly payments based on the balance you carry. At any time, you can choose to pay down the balance and still keep the line open. Like a credit card, the line is open until you or the lender decides it needs to be closed.
How can I Open my Home Equity Line Today?
Most borrowers use a home equity line of credit to make purchases for their house. These may include furniture, appliances or improvements to the property. More immediate needs may arise, though, that require financing immediately, such as a wedding, home repair or emergency bill. As such, you may consider applying online for a line of credit immediately. It is easiest to do this with the lender who currently supplies your mortgage given the mortgage is in good standing. You may also apply directly with the bank that holds your accounts. Using a lender known to you will expedite the process.
What if I want the Lowest Rates?
Immediate online quotes are not typically the best deals on the market. Lenders take advantage of the fact you are a hasty shopper to mandate higher interest rates and less favorable terms. If you have the time to speak with a home equity broker directly, you may find better options. You can negotiate the terms, like electing for a lower limit, in exchange for a better interest rate. In total, your application filled out in person should only take a week or two to process. While this is not instantaneous, most people will find its worth the short wait.
What Happens if I Default?
Rushing into a home equity line of credit is also not advisable if you do not understand the risk you are assuming. Even though your primary mortgage holder still holds the deed to your house, the home equity lender will become an additional lien holder on your property. You are agreeing to forfeit the equity you place down as collateral on the loan if you default. Your home equity lender can purchase your primary mortgage, even if it is in good standing. If this occurs after you default on your home equity, then you can end up in foreclosure with few little options to remain in your property.
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