How Long Does It Take To Refinance A House? (2024)

FAQs

How Long Does It Take To Refinance A House? ›

How long does it take to refinance a house? Refinancing typically takes between 30 and 60 days. Government-backed Streamline Refinance loans, which often don't require an appraisal, may close faster.

You must be on the home title for at least six months for a cash-out refinance (some exceptions apply). Any time for a simple or rate-and-term refinance; after seven months for a streamlined refinance; after 12 months for a cash-out refinance (can vary by lender).

On average, refinancing a house takes 30 to 45 days from application to closing. However, the timeline can vary: Shortest: 15-20 days for well-prepared borrowers with straightforward applications. Typical: 30-45 days for most conventional refinances.

For a conventional loan refinance, you'll usually need a credit score of 620. To refinance an FHA loan with Rocket Mortgage, you'll need a score of 580, and the same goes for VA loan refinances and VA IRRRLs.

At the same time, refinancing can be a little complicated, especially if your credit score is less than ideal or you're not completely sure what to expect. When you refinance, it means you're essentially taking out a brand new loan on your property, often for the remainder that you owe (but not always).

Key takeaways

Refinancing a mortgage temporarily lowers your credit score. Refinancing can affect your credit score for up to one year while remaining on your credit report for up to two years.

It typically takes about six weeks to refinance a mortgage, though there are streamlined refinance options that can wrap up faster. Understanding the factors that speed up or slow down the refinance process can give you more control over how long it takes to refinance your house.

If you are refinancing a mortgage, you have until midnight of the third business day after the transaction to rescind (cancel) the mortgage contract. The right of rescission refers to the right of a consumer to cancel certain types of loans.

It is possible to sell your house immediately after refinancing – unless your new mortgage contract includes an owner-occupancy clause. It is common for owner-occupancy clauses to require you to stay in your house for six to twelve months before selling or renting it out.

The first step in the refinance process is to set a clear goal. Figure out what benefits you want from a mortgage refinance and what type of loan will help you get there. There are a number of reasons homeowners choose to refinance.

What disqualifies you from refinancing? ›

The federal government considers a 43% DTI ratio the upper limit for mortgage approvals. Ideally, your DTI ratio should be 36% or lower. If your new mortgage payment puts you above the refinance debt-to-income ratio, your application may be denied.

To qualify for a refinance, take a look at your debt-to-income ratio. The new monthly mortgage payment shouldn't be more than 30% of your monthly income. To refinance $400K over a 30-year fixed term with an interest rate of 3.5%, you'll need an income of approx. $6000/month.

You don't need a down payment to refinance, but you'll likely have to come up with cash for closing costs. Some lenders let you roll closing costs into the mortgage to avoid upfront expenses. You can also try negotiating with the lender to waive them.

Refinancing to lower your monthly payment is great unless you're spending more money in the long-run. Moving to an adjustable-rate mortgage may not make sense if interest rates are already low by historical standards. It doesn't make sense to refinance if you can't afford the closing costs.

The cost to refinance a mortgage ranges from 2% to 6% of your loan amount, and you can expect to pay less to close on a refinance than on a comparable purchase loan. The exact amount you'll have to pay depends on several factors, including: Your loan size. Your lender.

Moving into a longer-term loan: If you're already at least halfway through the loan term, it's unlikely you'll save money refinancing. You've already reached the point where more of your payment is going to loan principal than interest; refinancing now means you'll restart the clock and pay more toward interest again.

In most cases, you'll need to wait at least six months after buying a house before you can refinance. Some government-backed loans, such as FHA, VA, and USDA loans, may have different waiting periods ranging from 6-12 months.

Refinancing allows you to lengthen your loan term if you're having trouble making your payments. The downsides are that you'll be paying off your mortgage longer and you'll pay more in interest over time. However, a longer loan term can make your monthly payments more affordable and free up extra cash.

With a shorter loan term, borrowers save money in the long run, but you'll have higher monthly payments. And, as with many refinances, you'll also have to pay closing costs to refinance from 30 to 15 years.