Several lenders advertising quick refinance programs for people however these lenders often neglect to tell consumers what they are cutting out of the refinance process, which can end up costing you money. Normally, a refinance is not a “quick” process, because so much has to be done to document your current mortgage status and process your new loan.

“Six to eight weeks from application to closing is probably a fair estimate”

The reason it takes so long is simple – a refinance is not the simple action that some lenders advertise. There are several things that should be done with a refinance loan which bear a strong resemblance to the process of acquiring your initial mortgage.

Initial Application Review

First, the lender looks at your application and “pre-approves” you for a loan. Pre-approval simply means the lender is willing to move forward with your loan, not that you are guaranteed to get it. It is important to put all your information down accurately and clearly on your application or you may experience delays.

Property Appraisal

Next, the lender will take several steps to secure your loan. Your house must be re-appraised for value, which means you will have to schedule a time for the appraiser to come by and see both the exterior and the interior of your house. The appraiser will take measurements, make notes on your home’s condition, and compare your home to others which have recently sold in your neighborhood. This will allow your loan company to set a value on your house from which to figure your new mortgage amount.

Title Examination

The mortgage company has to request a copy of your mortgage title and have it examined to ensure there are no other liens present and a new mortgage can be secured in the primary position against the property. Depending on where you live a title search could take a couple days to a couple weeks.

Verification of Application Documents

While the appraisal is being conducted, your lender will be checking and verifying your employment status and income, checking on your savings and checking balances, and reconfirming any information which was unclear in your application. The lender will have a copy of your credit report, and may call you several times to discuss questions about your debts or payment history. Be very honest in this process; most lenders understand that everyone can miss a payment once in awhile, and will not disqualify you because of this. However, finding out that you were dishonest about money owed or your credit history will disqualify you very quickly from consideration for your new loan.

Mortgage Loan Underwriting

Once the lender has the appraisal, a solid credit history, and all your income verified, the company will begin to review your loan. For some groups, this is done by individuals, but in most cases it is accomplished by a group. This is for your safety as well as the company’s; most lenders want more than one pair of eyes on your application to spot potential problems and possibly get them fixed. During the review, the lender may ask questions of your agent or broker, who may in turn call you for clarification. It is important to be as thorough as possible in your answers.

The lender’s review board will do one of three things with your loan application: reject, accept, or ask for revision. Rejections usually occur because of bad credit scores; if your score is too low, you can work on pulling it up and apply again at a later date. Most lenders will not consider you for a refinance with a credit score of less than 700, although there are lenders in the secondary market who deal with applicants with lower scores; of course, you will pay much higher interest rates in these cases.

Follow Up Documents

If your lender asks for revision to your loan application, get whatever documentation you need quickly and forward it to your agent or broker. He or she will rush it to the lender’s review board; be aware, however, that they may have moved on to other applications and it may take some time before they return to yours.

Scheduling a Closing

If your application is accepted, the review board will contact your mortgage broker or agent, who will contact you with the good news. The process is not quite over, however; now you have to schedule a closing. Some lenders will send a person to your home to go over the paperwork with you; however, most lenders schedule closings in lawyer’s offices to protect everyone’s interest. The lawyer will have to schedule you as your schedule and his or hers permits, so it may be some time before you can get in for your closing.

Altogether, you can count on this process taking around six weeks, although eight is probably a better estimate with many lenders. There are companies who can process a mortgage refinance a little faster but nothing will happen overnight.

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