by Matt Frankel, CFP | Updated July 19, 2021 - First published on Sept. 25, 2020
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Here's how quick and easy the refinancing process can be.
Americans are refinancing their mortgages in record volumes, and it's not hard to see why. Mortgage rates have plunged to all-time lows as a result of the COVID-19 pandemic. That means homebuyers can lock in low interest rates and save thousands of dollars.
However, the surge in refinancing applications has also led to frustrating delays. The average time it took to close a refinancing loan was 50 days in August according to the Ellie Mae Origination Insight Report -- a sharp increase from the 35-day average in March.
Borrowers can shorten this timeline if they choose a lender that focuses on efficiency. And there are some good ones to choose from. Here's my recent refinancing story, and some tips on the quickest and most cost-effective way to refinance your mortgage.
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After shopping around, I refinanced with Better.com (one of our favorite mortgage lenders). I couldn't be happier with how it went -- my experience was fantastic. Note: I have not been compensated by Better for writing this, I'm just using my own story to offer some suggestions.
First off, here's how the timetable went:
It took 34 days from the time I applied until the time my loan was funded. And it's worth noting it would have happened a few days sooner if it hadn't been for Labor Day weekend. To make this timetable even more impressive, I'm technically self-employed, which adds significant documentation requirements (and time) to a mortgage application.
Better.com's user-friendly online platform made the process smooth and easy. It posted "tasks" in my portal -- forms to sign, documentation requests, etc. Each afternoon I'd get an email about the tasks I needed to complete. I could scan my documents or even take pictures on my phone. Every time my loan moved to a different stage (such as from underwriting to closing), I'd get a personal email from a Better employee to introduce themselves and let me know what to expect next.
Better.com claims it closes loans 10 days faster than the industry average, and now that I've been through the process I can believe it. I've obtained a total of six mortgage loans, including investment properties, in my lifetime. This was by far the easiest and smoothest it's ever been.
Obviously, every refinancing is different, so you won't have the exact same experience I did. However, you can help your refinancing go as smoothly as possible by using these five tips. They could also save you money.
The bottom line is that if you're paying over 4% (even less in many cases) on your mortgage, you may be able to save thousands by refinancing. And if you're prepared, you can get your refinancing done quicker than you might think.
Chances are, interest rates won't stay put at multi-decade lows for much longer. That's why taking action today is crucial, whether you're wanting to refinance and cut your mortgage payment or you're ready to pull the trigger on a new home purchase.
The Ascent's in-house mortgages expert recommends this company to find a low rate - and in fact he used them himself to refi (twice!). Click here to learn more and see your rate. While it doesn't influence our opinions of products, we do receive compensation from partners whose offers appear here. We're on your side, always. See The Ascent's full advertiser disclosure here.
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