How Long Does it Take to Refinance a Mortgage?
Homeowners looking to refinance their mortgage usually base their decision on the current interest rates. To make sure that you do not lose out on the opportunity to lock-in low rates on your mortgage, you need to know how long does it take to refinance a mortgage. When you are aware of the process involved and the time that it will take, you can take a refinancing decision and plan your finances accordingly.
The simple answer to how long does it take to refinance a mortgage is that it can be anywhere between two to four weeks before the whole process is completed. However, it can also take much longer and the exact time it will take depends on how smoothly the different steps of the process go. For example, how soon can the appraisal be done and whether or not all the documents are in order can have a major impact on the total time taken for refinancing a mortgage. Here is an overview of the steps involved in the refinance process and both the borrower and the lender are responsible to ensure that all of these go smoothly so that refinancing can be completed in the expected timeframe.
Engaging the Services of a Broker
It is highly recommended to use a mortgage broker who can suggest a suitable lender for refinancing your mortgage. You need to quickly settle the terms of engagement with the broker so that you can initiate the refinance process as soon as possible.
The process of mortgage refinancing can be quick if you have all the necessary documents in place. Other than the loan application, details of your existing mortgage, identification
documents, tax return statements etc should be kept ready. Once the documents are submitted, a title search to ensure that there are no other liens on the property is ordered. You credit report is another document that would be needed and it can sometimes act as a bottleneck.
A fresh property appraisal is an important part of the mortgage refinance process. Scheduling and getting the appraisal completed on time is a key determinant of the time taken to refinance a mortgage. The mortgage broker can suggest appraisers in your area who can complete this step quickly.
The underwriter will assess your financial situation and your equity in your home in comparison with the amount of loan requested. Your monthly income, bank statements and credit history will all be considered. All the financial documents provided by you will be evaluated to determine whether you are a low-risk or high-risk borrower. If you have a good credit score, you can expect the underwriting process to be completed faster.
Once all these steps have been completed, the lender will close the loan and the loan amount will be disbursed to prepay the existing mortgage. If you are not satisfied with the prepayment terms and intend to negotiate with the previous lender, there could be a further delay before the loan can be closed.
Exactly how long does it take to refinance a mortgage depends on your individual case and the mortgage broker or the lender can give you a more precise estimate of when the loan can be disbursed. They can also advise you on how potential bottlenecks can be removed so that the process can be completed faster.Source: canadianmortgagesinc.ca