How To Speed Up Your Refinance

When you refinance, you are swapping out your current mortgage loan for a new one. Your lender will need to check your credit reports and credit score and make sure your monthly income is high enough for you to afford your new mortgage payment.

This comes with closing costs. How much you pay will vary, but you can expect to pay from 3% to 6% of your total loan amount in closing fees. Fortunately, you don't have to pay these fees upfront. You can roll them into your mortgage amount at closing, meaning that you'll spread these costs out over the life of your loan.

Closing a refinance can take time. But how can you speed up the process? Take the following steps:

Don't wait to gather your paperwork: Lenders need to verify your income before they can approve your refinance. They'll need copies of your most recent past two paycheck stubs, past two months of bank account statements, past two years of tax returns and past two years of W-2 forms. The sooner you get these documents to your lender, the faster the underwriter can move ahead with your refinance. Dragging your feet on providing lenders with this paperwork will only slow the process.

Be flexible with the appraisal: You typically need 20% equity in your home to qualify for a refinance. To determine how much equity you have, your lender will send an appraiser to determine the current market value of your home. Don't make it difficult for your mortgage provider to schedule this appointment. Again, the faster your lender gets your home appraised, the sooner the company will close your refinance.

Be able to explain any income irregularities: You'll need to explain any unusually large deposits to your bank account. Lenders need to determine whether those deposits are a gift, money that you've saved up before depositing it or income that will come in regularly. When lenders ask about any unusually large deposits, be honest; avoiding the question will only delay the approval process.
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Answer any other questions or requests quickly: You might need to provide additional proof of income during the underwriting process, the time during which your lenders' underwriters review your finances to make sure you can afford a new mortgage. You might need to answer questions about your employment status, job history or any missed payments or bankruptcy declarations listed on your credit reports. Whatever the question, respond promptly. The faster you provide the answers, the sooner you'll get to the closing table.