1. Application. The first step in the refinance process is to complete an refinance application with your lender. This will include basic information about your income, current mortgage, and financial obligations, as well as specifics about the property. You’ll also undergo a credit check at this time.
2. Documentation. Certain documentation, including tax returns, paycheck stubs, bank statements, and proof of additional income such as alimony or child support, may also be required. Gathering it all up can take some time, so check with your lender for a full list of required documentation for your type of refinance loan.
3. Appraisal. In some cases, an appraisal will be required to determine your home’s market value at this point in the refinance process. A non-biased, third party appraiser will go through your home, making note of features, amenities, structure, number of bedrooms, property, and other factors that affect the value of your home. In most cases, the borrower will pay for the appraisal, which usually costs between $300 and $600. The appraisal will then be sent to your lender so that they can verify that the home you are to refinance doesn’t have less market value than the refinance loan you’re about to take out.
4. Underwriting. The underwriter reviews your loan documentation and application, ensuring all the information is correct. The underwriter may also be the deciding factor in whether or not a loan is approved, based on the information in your application.
5. Approval. Once the underwriter approves the loan, you will receive an approval letter with the loan’s terms. You’ll also receive information on how to schedule your loan closing, which will be very similar to that of when you first bought your home. In addition, you’ll be given an exact amount for your closing costs, which will need to be paid at your closing.
6. Closing. The closing is the final step of the refinance process. You’ll meet with your lender or title agency, sign the papers, and pay any necessary closing fees.
The amount of time it takes to complete your refinance process will depend on factors like how quickly you provide the proper paperwork, how busy the appraiser is, and your current financial state. Straight refinance loans– refinance loans designed only to reduce interest rate– usually process more quickly than equity cash-out loans. However, there is no hard and fast rule. An average refinance loan is complete within one to three months of the application date.
Be Informed. Knowing what to expect during the refinance process can help to make it go by quickly and smoothly. For more information on home refinancing, get a free mortgage refinance quote or call a friendly NLC Loans personal mortgage advisors toll-free at 877-480-8050.
Learn more about commonly asked questions about refinancing.