As a multiple property owner, I’ve done a lot of refinances over the last twenty years. So just how long does it take to refinance a mortgage loan nowadays? The short answer is: 2-3 months on average. This is up from one month on average before the global financial crisis.

With rising mortgage rates in 2022, it’s getting harder to qualify for the best mortgage rate. More people are priced out and lending standards are very high. Banks are also bracing for an economic slowdown, which many result in more mortgage defaults.

How Long Does It Take To Refinance?

The average time it takes to refinance in 2022 is 60 – 75 days. If you’re unlucky it can take much, much longer. Man it can feel like forever. But the slog is worth every dollar you can save. Why pay more money for your mortgage if you don’t have to?

The 2007-2008 financial crisis is long behind us. Yet, it still takes brutally long to qualify for a new mortgage or refinance a mortgage via the bricks and mortars banks.

Why? You need to gather a lot of documents and patience even before starting the underwriting process. Banks want to see a healthy W2 income or at least two years of 1099 income.

In addition, major lenders with great rates like Wells Fargo and Citibank are struggling to keep up with demand.

A Mortgage Refinance Example

If you’re wondering how long does it take to refinance a mortgage, let me give you an example. Here is a true story about one of my previous mortgage refinances. I can’t believe how long it took to refinance! It was one of the hardest mortgage refinances ever.

* * *

At long last, my principal residence mortgage refinance is done! Things were looking very dicey towards the end. PG&E threw a couple grenades my way that hit my credit score by ~100 points.

Stupidly this was due to an $8 non-payment I was unaware of from three years prior by my tenants. Alas, the Humvee was able to withstand the blast from corporate evil and make it back to home base!

The mortgage loan refinance started on January 20th when I heard a friend say he just locked a 5/1 ARM for only 2.75%. Ehh? I had just refinanced my own 5/1 ARM in the fall of 2014 to 3.125% from 3.625% and I wanted to dance the mambo too!

I incredulously gave Citibank a call to see if I could get the same offer as my friend with all fees baked into the price and they said absolutely! In fact, the very next day, my banker called me to say that they could give me 2.625% with all fees included. Yeah baby, yeah!

The Mortgage Loan Refinance Saga

Having been a Citibank Gold client for over a decade, I had absolute faith my mortgage refinance would go through. After all, just three months earlier, I had closed on my mortgage refinance with them.

They had all my documents and access to all my accounts. Easy peasy right? What could go wrong? Ha! Here are all the documents you need to complete a successful mortgage refinance.

Mortgage Loan Saga: The First 30 Days

30 days had passed since locking the loan before I got any requests for documents. The usual suspects were requested:

• W2 form
• Latest 2 pay stubs
• Printout of assets from bank accounts or only one if it had over $250,000
• Home insurance policy

I actually thought they didn’t need any of this since they waited 30 days to contact me for this information. Not a problem, I sent over all the documents via their interoffice mail since my fax machine was broken.

During this time period, I received three Good Faith Estimates (GFE’s) that reviewed the terms of the loan, and two credit score reports that showed me in the 790-800 range, as expected since that’s what it was now 4.5 months ago during my last refinance.

Mortgage Loan Saga: Days 30-60 – A Bullish Datapoint

After sending in all my documents, I heard nothing from Citibank for the next two weeks. Not in a rush, I went about doing my own thing until I realized, wait a minute. Don’t we need to do yet another appraisal since an appraisal report is only good for 90 days after?

I shot my Citibank representatives an e-mail asking about the appraisal, and they said I would need one, and that they’d get back to me. I asked them why they were taking so long, and they said they were backed up due to all the purchases going on.

Bullish indicator! If you are putting in an offer to buy a home, you generally want to make it quick and painless for the seller to accept. That usually means a 30-45 day close maximum. I can certainly understand Citibank prioritizing purchase loans over refinances.

Citibank finally got back to me around day 55 and confirmed that an appraisal is needed. Great, another $750 $860 out the window, but good thing Citibank was handling the cost.

The appraisal is always the tricky part because nowadays, a bank will only loan up to 80% the value of the house e.g. 80% LTV = $800,000 loan for a $1,000,000 house.  

Home Appraisal For Refinance

I wasn’t too worried since the refinance before. My LTV was at 60%, but one never knows. Earlier, I wrote a post entitled, “Sweet Talking Your Home Appraiser Pays Off“, which provides some tips for those who are worried.

It turns out that the home appraiser didn’t even have to come to my house this time! The appraiser just sent in an electronic report to Citibank, appraising it coincidentally at the same amount from 4.5 months ago!

What an easy, great job to have! If you want to make bank, become a home appraiser. You’ll at least make multiple six figures no problem, so no complaining all of you who make less!

Mortgage Loan Saga: Day 60-75 – Nothing Is Happening!

Although Citibank is paying the $860 home appraisal fee, I am really paying the fee indirectly through a higher rate. There is no free lunch in mortgage refinancing.

When they say all fees are included, the bank has already baked in their own margins. Hence, those people who feel guilty about collecting unemployment insurance even if they have the means, don’t feel guilty!

Just know that your employer already baked in your salary to account for the unemployment insurance they have to pay. Collect, and collect with pride!

Another two weeks went by, and I was getting worried. It’s day 75 and in this time, I get three more Good Faith Estimate reports and another credit score update.

The process is killing trees inefficiently! I guess sending the GFE’s is a good way to protect the client, but during these past 75 days, the rate and the loan amount did not change, so I don’t know why they kept on sending me these papers. By deduction, I realize that it was their fees that kept on changing. Interesting.

Mortgage Loan Saga: Days 75-85 – Shit Is Hitting The Fan And Splattering!

By day 76, I am totally miffed at WTF is going on with my mortgage refinance. The 10-year yield moved up from 1.85% when I locked, to 2.3% and I was getting worried. 

Is my mortgage refinance really not going to go through? I began to wonder. I kept on thinking what a waste of time this all was, and started preparing for the worst, continuing with my 3.125% rate.

My mortgage loan officer contacts me and says I need the following additional papers for the underwriter:

• Home insurance statement with contact person and loan number

Fair enough, but why didn’t you ask me for this in the first 45 days?

Refinance Underwriting Inefficiency

At around day 80, I finally got an urgent call from my mortgage officer on my work line. I so happened to be golfing that day, and my assistant said that I wasn’t working (that day).

My mortgage officer took it to mean that I was no longer working at my job and e-mailed me with a title, “URGENT: Please Respond Immediately!” Funny, alas, they were feeling the sense of urgency because there was only 10 days left until we’d lose the incredible 2.625% lock!

My mortgage officer picked up the phone and said, “We can’t go through your mortgage refinance if you are no longer working!”

I replied, “What the hell? Just because I take the afternoon off to go play golf doesn’t mean I’m no longer working. I’m working on my 2-iron stinger, lady!“

She calmed down, and brought up the news of my devastating 100 point credit score hit. This was due to a highly delinquent payment from PG&E that my tenants forgot to pay, which I mentioned earlier.

You can read about the entire story in “Corporate Greed By PG&E Killed My Friend’s Family And My Credit Score“.

Don’t Let Stupid Errors Ruin Your Chance To Refinance

After 80 days, I was now pissed off for them waiting so long to get going. Amanda implied in our conversation that the mortgage refi was all but dead.

I wrote her a long e-mail back saying that this was wrong of them to do. I’d been a good client for over 10 years. In addition, I’d never been late, have referred over 30 customers, and have enough cash in the bank to pay off the entire principal loan for goodness sakes!

How could that stupid $7 PG&E snafu surface now, and not during my last refinance?

Alas, a senior mortgage officer stepped in and assured me that the mortgage refinance would go through. I spoke to PG&E and told them this delinquent payment penalty was egregious.

They agreed to send me and my bank a “Clear Credit Letter” stating that the delinquency is removed and they contacted all credit agencies to remove the penalty. The senior mortgage officer even called PG&E to expedite the process. Phew. Good job Citibank!

Mortgage Loan Saga: Day 85-90 – Aloha Emancipation

Even though I knew we were closing in on the 90 day limit for closing, I decided to take advantage of a Hawaiian Airlines three-day sale and buy a round trip ticket to Honolulu for $328, including tax and fees. Was this irresponsible of me? No. A little stubborn and risky? Yes.

I wasn’t about to let this mortgage refinance saga derail my plans for having fun. Remember, making money and saving money are a means to a better lifestyle. Sitting around twiddling my thumbs in San Francisco waiting for Citibank, while I could be in Hawaii playing golf and surfing doesn’t make sense.

I told my mortgage officer and her boss that I was off to Hawaii, and that if they want me to sign the papers, I would do so when I return in a week. Alternatively, they could send a notary to my place of residence in Hawaii to get the process done.

They elected not to wait another week and hired a notary for $175 at their expense to meet me at my place! Now that is service!

Mortgage Loan Saga: Day 90-97 – Head-fake Coco Head

When the notary showed up, she showed me my settlement statement and asked for a cashier’s check for the interest due for the rest of the month.

What? Nobody from Citibank informed me about needing a cashier’s check and this amount of money. Well guess what? There are no Citibanks in all of Hawaii! 

There are also no Bank of America’s or any other bank for that matter.  Only Hawaiian banks for protectionist reasons. Augh.

I couldn’t easily wire transfer online (figured out how to later), or get my private banker to do it because I’d need to fax them (not e-mail) a signed letter with all instructions. I was not about to spend another hour of my time going to Kinko’s or somewhere to do this.

Instead, I told Citibank and the title company they’d have to wait another 5 days until I got back to San Francisco before they could officially close the loan. 

Devil Is In The Details

The closing officer at Citibank dropped the ball by failing to review my final statement with me over the phone or on e-mail, and indicate the necessary cashier’s check I had to bring. Details people, details!

By this time, I was just laughing. What’s another 5 days? I thought to myself. Time to make them sweat given the wait and fear of things not going through starts messing with your head after three months for the borrower.

In the end, it took 97 days to get my mortgage loan refinance completed. I should be getting some checks back from Citibank due to overage charges. I’ll then need to set up the account online to do auto-transfer so I never have to think about paying.

Takeaways From Refinancing A Mortgage Loan

We’ve come a long way since the credit freeze of 2008-2009. Here’s a recap of where we are, and where we’re going.

Banks Are Lending Again

Banks are lending again. But they are being encumbered by new government rules and regulations which are there to protect the borrower. The 10 Good Faith Estimate documents is the most obvious example where things have changed.

In the past, I only got one. Speaking to the notary, it turns out that our magnificent government instituted this GFE rule in 2011, so that anytime even a penny of fees is changed, they must send a new multi-page document via FedEx/UPS.

This is good for consumers, as hopefully we consumers read the GFE’s and point out discrepancies.

30-40 Days To Refinance Is Fast

Before the 2008 financial crisis, a mortgage refinance would take 30-40 days on average. Soon after the financial crisis in 2010, mortgage refinances were taking 50-65 days.

After speaking to several friends who are also refinancing, and going through my own experience, it looks like mortgage refinancing is taking 80-90 days +++.

Amanda, my mortgage officer said they are super backed up. A large portion of their refinances are taking well over 90 days! One friend, who is refinancing with Citibank said he’s in month 7 of his mortgage refinance!

LTV Standards For Refinance

A loan-to-value of 80% is industry standard now. I don’t know any banks who are lending more than 80% of the value of your property.

This is good for all of us in the long run. It weeds out donkey’s who over leverage, blame other people for not being able to pay their debt, and end up hurting all of us in the process.

The problem for some is that they need to come up with a cash-in refinance to get their LTV ratio to 80%.

Cheap Money Is Getting More Scarce

When I refinanced in the fall of 2014, the 10-year yield was at the same level as when I locked in my refinance on January 20, 2015, around 1.88%. However, in 2022, the 10-year bond yield is closer to 3.5% and average mortgage rates have climbed.

The cheap and easy money from 2020 and 2021 is over! As a result, it’s more important than ever to prepare your finances to qualify for a lower mortgage rate.

People Who Don’t Need To Refinance Get To Refinance

People who do not need to refinance get to refinance. This is the law of unintended consequences. Only if you have excellent credit (760+) and a LTV of 80% are you able to refinance.

If you don’t have a job, are struggling to make your monthly payments, have an underwater home mortgage loan, and have poor credit, banks will not lend to you. In fact, well-qualified borrowers are getting quoted much lower mortgage rates than headline averages.

Now, if only I could get the same rate as new borrowers nowadays, I could much readily pay my monthly mortgage, you think to yourself. Since you can’t, you might as well default and tell the bank and the government, Up yours! Now the cycle begins.

The Rich Will Get Richer

The rich will get richer. From individuals to private real estate funds, those with capital are buying properties in droves right now. They understand that a rental yield of 8% vs. a borrowing rate of 3% is a great return to earn while they wait for capital appreciation.

The very same mega-landlords will write great propaganda why renting is better than buying to keep people out of the purchase market (less competition), and keep people happy to keep paying rent.

Banks Hate The Government Too

Banks hate the government as much as people. Before you go blasting your mortgage officers for dragging their feet, know that they are waiting on the underwriter just as much as you are waiting on the mortgage officer to get back to you.

It’s because of new government regulations that have made the underwriting process significantly more difficult to pass, that has created a 100% increase in the time it takes to refinance a mortgage loan.

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Shop Around For The Best Mortgage Refinance Rates

Check the latest mortgage rates online. You’ll get real quotes from pre-vetted, qualified lenders in under three minutes. The more free mortgage rate quotes you can get, the better. This way, you feel confident knowing you’re getting the lowest rate for your situation. Further, you can make lenders compete for your business. 

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How Long Does It Take To Refinance A Mortgage Now is a FS original post.

Let’s look at the best time of the month or year to refinance a mortgage. If you can refinance at a better time of the year, you might be able to get a lower mortgage rate.

As I was getting harassed at the car dealership the other day, something dawned on me. There are optimal times throughout the month and year to refinance a mortgage due to human nature. Timing makes a difference when you want to save money.

Dropping by the car dealership every other week is one of my favorite hobbies. I get to go for test drives, soak up that wonderful new car smell, and curiously practice my negotiation skills all for free! Try it some time.

My Mortgage Refinancing Experience

I’ve refinanced my primary mortgage five times. And, have refinanced my other rental properties by a combined 10 times in the past 10 years.

With each refinance, I get better at negotiating. I learn where I can press for credits and when I can no longer squeeze blood from stone. I’ve also learned there is a best time of the month to refinance a mortgage. And a best time of the year as well.

One mortgage officer called and yelled at me when I asked for another $250 credit at closing given he promised a no out of pocket refi. I got him to own up to our agreement, but we never did business again.

I’ve gotten to know five mortgage loan officers across various traditional banks such as Citibank, Bank Of America, and Chase.

They’ve all shared with me some of their motivational points, which are all the same. One also shared with me why it’s so hard to get a mortgage nowadays.

With my experience in refinancing, working in finance, car dealing, and personal relationships with people in the mortgage business, let me share with you some discoveries I’ve found to get the best mortgage rates possible.

The Best Time To Refinance A Mortgage

What banks recommend: If it’s up to the loan officer, the best time to refinance a mortgage is always! This is because they are paid through transaction volume. The more mortgages they refinance or originate, the greater they get paid.

In this current interest rate environment, you could do well to look at rates. If you have not refinanced or checked rates in the last 6-12 months, I’m pretty sure you’ll be pleasantly surprised. You may be able to get a similar mortgage at least 0.375% lower than your existing rate. I know I did.

What I recommend: I only recommend homeowners refinance their mortgage if they can lock down a similar mortgage at least 37.5 basis points (0.375%) or lower AND break even within 24 months. If you can do this, refinancing now is a no-brainer.

Here are some additional refinance tips to reference to help you with the process.

Figure Out Your Mortgage Fee Break Even Point

When you want to determine the best time of the month to refinance a mortgage, or year, always figure out your break even point.

If you can break even within 36 months, that’s OK provided you KNOW you plan on staying in the house for another five years. A break even point longer than 36 months is just not worth the time or effort because nobody knows the future for sure. The median homeownership duration is only 5.9 years to give you a point of reference.

In a shaky economic recovery, investors tend to pile into US Treasuries. So, in other words, investors would rather invest in a risk-free asset that barely keeps up with inflation instead of buying Apple stock.

In a bull market, investors tend to sell treasuries (gov’t bonds) and buy stocks or other instruments because they feel the risk reward ratio is better.

Even if The Federal Reserve is raising rates, that doesn’t necessarily mean mortgage rates are going up. The market determines rates, not the fed.

Slow economic recovery + government intervention means everybody should be refinancing their mortgages regardless of what time of month or year. But, now it’s time to strategize when to refinance to get an even lower rate at the margin. It’s all about understanding a person’s motivation and understanding the spread.

Related: Should I Do A Cash-IN Refinance? The Benefits And Risks Of Paying Down A Mortgage For A Lower Rate

The Best Time Of The Month To Refinance A Mortgage

Each mortgage loan officer has either a monthly or quarterly target to reach. Practically every single sales department has monthly and quarterly quotas. This is especially true for publicly listed companies given they have to report results every quarter.

If you’ve ever been to a car dealership, you can sense they are much hungrier the last week of the month vs. the first week of the month!

Very few people can keep up their selling intensity every single day without burning out. Thus, most people save their energy for the last two weeks of the month and the last month of each quarter.

You can see from plenty of organizational behavior charts how effort really drops off after a particular deadline. Everybody knows what it’s like to relax after studying so hard for a mid-term or final!

Conclusion: The best time of the month to refinance your mortgage is the last two weeks of the month. The best time of the quarter to refinance your mortgage is the last month of the quarter: March, June, September, December.

The Best Time Of The Year To Refinance A Mortgage

Year-end bonuses make up a large portion of one’s total annual income in the financial services industry. There are plenty of cases where a year end bonus can be 2X-3X your base salary if you are a star performer. As a result, driving revenue for the firm matters when bonus decisions are being made.

Nobody, and I mean nobody, remembers much of what you did the first quarter of the year. That’s why when it comes time to pay your year-end bonus you need to remind your boss of your accomplishments. There is asymmetric emphasis on what you did in the second half of the year. And more importantly what you did in the 4th quarter!

Another important thing to know is when each firm’s fiscal year (as opposed to calendar year) ends. It would be nice if all companies’ fiscal years were the same as their calendar years. That is starting on Jan 1 and ending on Dec 31, but this is not the case. Some companies have fiscal years that end on June 30th!

In other words, their fiscal year for accounting purposes, which includes paying bonuses starts on July 1 and ends on June 30. Thankfully, most banks have fiscal years ending on Dec 31.

Get The Lowest Mortgage Rates During 4th Quarter

Assuming books close on Dec 31, bonuses for the fiscal year must be determined at least two weeks before i.e. Dec 15 or sooner. Hence, mortgage loan officers know to be the most aggressive in closing loans in the 4th quarter of the year.

The idea is to finish the year strong. Make amends for a bad first half, get paid a handsome bonus sometime in January. Then, cruise for the first half of the new year and repeat!

Conclusion: The best time of the year to refinance your mortgage is in the 4th quarter: October, November, December. The best time to refinance during the 4th quarter are the last two weeks of October and November, and the first two weeks of December.

Why Does Timing Within Timing Matter For Getting A Lower Mortgage Rate?

Banks work on spreads. If they can pay 1.5% for $1 million in capital (deposits) and lend out at 3%, they make $15,000 a year provided you honor pay back the loan.

Look at current savings and CD interest rates of 0.1-2%. They are abysmally low. Meanwhile, if banks can earn a 1% spread on billions of dollars of loans, you can see how they’ll make lots of money!

Mortgage loan officers have wiggle room as to how much spread they want to make off your loan. For their best customers, such as those who provide consistent referrals, banks will often charge a tiny spread or no spread just to retain the relationship.

Such clients might have multiple different product accounts open which are more lucrative for the bank. Relationship pricing for mortgages is a big thing. For new customers who don’t have a lot of assets, the spreads are wider.

When mortgage loan officers are aggressively trying to hit their quotas, they will give you more wiggle room. They do this by narrowing their spread or providing more credits.

Not only is generating revenue important, loan officers like to show a large number of loan originations or refinances. There is a customer lifetime value for every customer as chances are there will be future refinances and healthy referrals.

Knowledge + Action Creates Wealth

It’s important to understand how systems work. Now you understand how mortgage loan officers are incentivized. As a result, you can use this knowledge to get yourself the incrementally best rate possible.

Now that you know the best time to refinance a mortgage, you should also know how to get the best mortgage rate possible.

Check the latest mortgage rates online. You’ll get real quotes from pre-vetted, qualified lenders in under three minutes. The more free mortgage rate quotes you can get, the better. This way, you feel confident knowing you’re getting the lowest rate for your situation. Further, you can make lenders compete for your business. 

Invest In Real Estate

Given interest rates have come way down, the value of rental income has gone way up. The reason is because it now takes a lot more capital to generate the same amount of risk-adjusted income. Yet, real estate prices have not reflected this reality yet, hence the opportunity. 

Real estate is my favorite asset class to build wealth. Record-low mortgage rates and positive home buying demographics is going to fuel the real estate market for the next decade.

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