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How Long Does A Refinance Take (And Why)?

Exact Answer: 30 To 45 Days

Credit is approved with proper terms and conditions that can keep the lender satisfied that they will get back the money they have loaned to the loan seeker. These terms and conditions can be about many things like the payment schedule, the mode of payment, and many more.

However, there are cases when an individual or business wants to change the terms and conditions of the loan agreement. In such a case, the loan seeker can put forward an appeal to the lender to do so. If the current or new lender agrees with the new terms and conditions in the appeal, a new agreement is drafted.

This process is called refinancing. Depending upon the parties, it can take weeks or months to refinance a certain loan.

 How Long Does A Refinance Take?

A refinance is revisiting and reorganizing the terms and conditions of the finance loan. At times, the revisiting and the overall refinancing can prove to be beneficial for both the loan seeker and the lender.

Over a financial year, the interest rate can change. Hence, borrowers can take benefit of the low-interest rates to pay less. There is a process that needs to be followed to get the existing finance refinanced. The complete procedure can take about 30 to 45 days to complete.

There is a lot to consider if a borrower wants to go ahead and get a refinance. It can include revising the terms, closing the existing finance which includes a closing cost, and much more. In such cases, it tends to take different periods to complete the whole procedure of a refinancing agreement.

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Other than the closing amount, there can be other factors too, like the process of the application, the lender’s policy, etc. These factors can increase or decrease the overall days that might go into the refinancing.

PeriodNumber of days it takes to complete the refinancing process
Maximum time45 days
Minimum time30 days

Why Does A Refinance Take That Long?

When it is about undergoing legal procedures that involve a lot of terms and conditions, it takes several weeks to complete it. More often the number of days might considerably increase when the legal contract is about finance.

The main reason behind the refinancing taking a lot of time is the process that a person has to complete. Apart from the process of getting the new loan financed, the refinancing also includes the cash out of the old loan amount. It can increase the overall time by a few days to a week.

The first step of refinancing is the application process. The borrower first needs to check what options are available. After this, the borrower can put forward the application for refinancing. Once the application reaches the lender, the lender will cross-check the credit standing of the borrower. They will also check the overall financial statements.

Once the existing lender or the new lender gives a go-ahead, it is time for the borrower to negotiate the interest rates as per the current rates. Fixing the terms and conditions can take a few days to a few weeks. Once all the discussions and negotiations are complete, the next step is underwriting.

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The underwriting procedure is when all the submitted documents are cross-verified and make sure everything is accurate and up-to-date. In cases where the refinancing is being done for a house loan, an appraisal is done to check the estimated value of the property. The appraisal can increase the time for refinancing.

The next step after the underwriting and appraisal process is the closure of the loan. During the closing, the borrower might have to pay for the closing costs if any. After all the discussions and pending payments are made, the loan is closed successfully.

Conclusion

Although the whole process of refinancing is somewhat similar to when a loan is taken for the first time, refinancing is still the one that takes lesser time.

The refinancing of a few cases can also be closed in just a few weeks. However, the maximum amount that can be invested in the refinancing process is 45 days, a few days here and there in rare cases. That can happen if there is a shortcoming from the borrower’s end.

References

  1. https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1540-6229.2005.00132.x
  2. https://onlinelibrary.wiley.com/doi/abs/10.1111/1540-6229.00807

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