When mortgage interest rates drop many homeowners will be seeking refinance loans to secure a better rate than what is on their existing mortgage and lower their monthly mortgage payment. Sometimes a refinancing a home also makes sense if you wanted to change an adjustable rate mortgage to a traditional 30-year or 15-year fixed rate loan, or if you want to eliminate the PMI on your current mortgage.
Whatever the reason for refinancing a mortgage, its important that you are able to complete the process as quickly as possible. That’s because once the rate for the refinance loan is locked in, the process needs to be completed within the required timeline or you could lose the rate or wind up having to pay fees for an extension.
Normally, this isn’t something to be overly concerned about, since the process for refinancing a home usually only takes between two weeks to 30 days to complete. Sometimes the process can even be quicker than that. However, just like with a regular home loan, there could be numerous reasons that the mortgage refinance faces delays.
Follow the advice in this guide to speed up the process of refinancing a home and reduce the chance of unexpected or unnecessary delays.
Know Your Reason for the Refinance
Don’t engage in refinancing a home simply because mortgage rates are lower. You should have a good reason for refinancing or be able to save a considerable amount of money on your new mortgage loan, because you’ll still likely have to pay closing costs, and it might not be worth it if you don’t save enough to get past the break even point.
Refinancing a mortgage can be pretty speedy if you’re simply trying to lower your mortgage payment, but if you’re seeking a cash out refinance, as many do in order to consolidate debt, then lenders may take more time to examine your financial situation.
FHA or VA loans offer refinancing options that is more streamlined than other refinancing loan options. There is usually no need for an appraisal, nor do they require verification of income so long as you have made your payments on time with your existing mortgage.
Errors in the paperwork or not filling it out completely contribute significantly to delays when refinancing a home. Take the time to make sure all information is filled out accurately and completely, and you’ll avoid delays by having to send paperwork back and forth.
As with a regular mortgage, when refinancing a home you’ll need to provide lots of documents to the lender. Having it ready beforehand can speed up the process. These documents typically include:
- Pay stubs from the last two months
- Your most recent W-2
- A copy of your current mortgage statement
- Bank statements from the last two months
- A copy of your homeowners insurance policy
- A copy of your driver’s license or another form of picture ID
- A copy of your current property tax statement
Most conventional refinancing home loans require an appraisal but sometimes you can get it waived. If you can do that, you’ll definitely speed up the process, as well as save you money on the cost of an appraisal.
Sometimes life circumstances can’t be helped, but when refinancing a home it is ideal if you stay at your current job. The lender will need to verify your employment and income, and changing jobs just before or during the process can result in delays.
Just like with your existing mortgage, the lender will require an explanation of any large deposits into your account. There may very well be legitimate reasons for any large deposits or withdrawals, but it is the duty of the lender to investigate, which, of course, delays the process.
Whether it’s a change in your job or a change in your bank account, letting the loan officer know about it as soon as possible can help to reduce any possible delay. Waiting for the loan officer to find out and then acting on it is simply wasting time unnecessarily.
Getting checks to the loan officer, appraiser, or other parties for necessary fees and closing costs can take time. Using a secure electronic payment system is much quicker and convenient, and eliminates the need to go to the bank. Paymints.io is a secure ACH transfer system that is ideally suited for the real estate industry, used by many real estate professionals across the country to keep the mortgage process moving along smoothly.
There are a number of things that could delay refinancing your home that you simply have no control over. These include:
A low appraisal — if this occurs, it could make refinancing more difficult. You can dispute the home appraisal if you can provide proof of recent sales in the area that better showcase your own home’s value.
You have a second mortgage — if you have a second mortgage that you plan on keeping, there is more involved in the process, called resubordination, and the second mortgage lender will also need to be contacted.
When refinancing your home, take the time to look around for the best rate. Sometimes online lenders or local credit unions will offer better rates than larger banks or lenders. When you do find a rate and lender you like, don’t hesitate to lock in the rate, as they can change from day to day. And if you have your paperwork all ready, you can get the process moving along quickly and hopefully complete the process painfully and without delay.
If you want to learn more about the mortgage process and what is involved when refinancing a home, as well as discover useful info on cash out refinances and other types of refinance loans, you can find plenty of good resources on online forums and blogs.
To learn more about how using paymints.io can be safer and more convenient when making payments for a mortgage refinance, schedule a free demo today!