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How Long Does It Take To Refinance A Mortgage Loan Nowadays? Hint: Be Prepared For Battle!

Updated: 09/03/2020 by Financial Samurai 113 Comments

Protesters Of Banks

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? You’ll find out below that it can be a long battle!

But the effort can really pay off. With rates at incredible lows, now is the time to save money on your mortgage. Can’t wait? Check refinance mortgage rates now.

How Long Does It Take To Refinance in 2020?

The average time it takes to refinance in 2020 is 35-45 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!

* * *

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!

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!

House On Golf Course In HawaiiMortgage 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’s 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 Cheaper

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%.

Spreads narrowed given my mortgage rate dropped to 2.625% vs. 3.125%. 

Now in 2020, rates are even lower. The 10-year yield is >1% folks and look at the drop in 30-year mortgage rates below. The time to refinance is now.

Mortgage rates at all-time lows 2020
Low Mortgage Rates In 2020 = Time To Refinance!

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 (720 to 740+) 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. 

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.

Wealth Building Recommendations

Shop Around For The Best Mortgage Refinance Rates

Credible – San Francisco-based Credible is a lending marketplace that provides real quotes for free. Don’t waste time applying for a mortgage on multiple different platforms.

It’s way more efficient to apply to refinance or get a new mortgage in one place with Credible. Multiple qualified lenders will compete for your business helping you save money.

Mortgage rates have collapsed to ALL-TIME lows after the Fed’s emergency 50 basis point cut on March 2, 2020. Take advantage of low interest rates by getting pre-qualified lenders to compete for your business.

I personally refinanced my primary residence at the end of 2019 to a 2.625% 7/1 ARM at no cost in 2019. In 2020, I locked in a 7/1 ARM jumbo for minimal fees at 2.25%.

See if you can refinance to a lower mortgage rate here.

Explore Real Estate Crowdsourcing Opportunities

If you don’t have the downpayment to buy a property, don’t want to deal with the hassle of managing real estate, or don’t want to tie up your liquidity in physical real estate, take a look at Fundrise, one of the largest real estate crowdsourcing companies today.

Real estate is a key component of a diversified portfolio. With real estate crowdsourcing you can be more flexible in your real estate investments.

Invest beyond where you live for the best returns possible. For example, cap rates are around 3% in San Francisco and New York City, but over 10% in the Midwest if you’re looking for strictly investing income returns.

Sign up and take a look at all the residential and commercial investment opportunities around the country Fundrise has to offer. It’s free to look.

Fundrise Due Diligence Funnel
Less than 5% of the real estate deals shown gets through the Fundrise funnel

Updated for 2020 and beyond.

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Filed Under: Mortgages

Author Bio: I started Financial Samurai in 2009 to help people achieve financial freedom sooner. Financial Samurai is now one of the largest independently run personal finance sites with about one million visitors a month.

I spent 13 years working at Goldman Sachs and Credit Suisse. In 1999, I earned my BA from William & Mary and in 2006, I received my MBA from UC Berkeley.

In 2012, I left banking after negotiating a severance package worth over five years of living expenses. Today, I enjoy being a stay-at-home dad to two young children, playing tennis, and writing.

Order a hardcopy of my upcoming book, Buy This, Not That: How To Spend Your Way To Wealth And Freedom. Not only will you build more wealth by reading my book, you’ll also make better choices when faced with some of life’s biggest decisions.

Current Recommendations:

1) Check out Fundrise, my favorite real estate investing platform. I’ve personally invested $810,000 in private real estate to take advantage of lower valuations and higher cap rates in the Sunbelt. Roughly $150,000 of my annual passive income comes from real estate. And passive income is the key to being free.

2) If you have debt and/or children, life insurance is a must. PolicyGenius is the easiest way to find affordable life insurance in minutes. My wife was able to double her life insurance coverage for less with PolicyGenius. I also just got a new affordable 20-year term policy with them.

3) Manage your finances better by using Personal Capital’s free financial tools. I’ve used them since 2012 to track my net worth, analyze my investments, and better plan my retirement. There’s no better free financial app today.

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Comments

  1. Don says

    November 2, 2020 at 5:40 pm

    Sent my paperwork to citi bank for a refi on March 30th 2020…
    Today is November 2nd and I am still waiting for a closing date.

    Reply
    • Financial Samurai says

      November 2, 2020 at 6:01 pm

      Wow! What’s the hold up? And what rate and terms are you getting?

      Reply
  2. James B. says

    June 10, 2018 at 1:55 am

    I’m in a strange spot and want out of my current refi with a new mortgage company. Had the appraisel done and just this week I’m on disability. They told me the process has stopped until I go back to work. Which at this point I won’t be cleared for who knows how long. I want out of this not so great of deal anyway. Can I get out (haven’t notarized) or is it fully up to them? Thank you

    Reply
  3. Edward Antrobus says

    January 18, 2017 at 2:37 pm

    I’m not sure I believe that government regulations are the real reason for underwriting going slowly. I changed banked mid refinance because I came to the conclusion that the underwriting department at my current lender really didn’t care one way or another if the refi happened. I was asked for a copy of my divorce decree three times. When a cosigner was suggested, the underwriters ran the original numbers without the cosigner and then denied the cosigner based on my information, whithout ever asking for the potential cosigner’s name, let alone financial information.
    I switched to another bank and was approved within two weeks.

    Reply
  4. Eric says

    September 30, 2016 at 7:31 pm

    I have been trying to close on our Refi that started on July 14, 2016 with Global Equity Finance. We have provided all documents they have asked for, paid $650 for the appraisal and paid out of pocket money to repair some things that needed repairing based on the appraisal. I was getting phone calls and emails on a regular bases when we started. Now that we are at closing I fell like I have lost a good friend…No more calls or emails, were did they go. :) I know there is a process to this and that it takes time, but this makes no sense. I will be happy to let the world know that GEF can do the job…if it gets done….but will not hesitate to tell others what I had to experience.

    Reply
  5. NatashaWittmann says

    June 8, 2016 at 1:02 pm

    Currently trying to refinance with Freedom Mortgage and it’s taking over 3 months. My husband and I have great credit, make very good money, have twice the necessary equity in our home, have never been late for a single payment and yet they are giving us the hardest time, looking for anything to nit pick at. There is clearly an issue with this company. I wish we had gone with a local bank who could have had this loan done 2 months ago, but we’ve already paid $500.00 for the appraisal. They have been saying just 1 more week, every week for the past several months. I fear it will never end! Dont walk, RUN away from this company! Ugh!

    Reply
  6. Johanna says

    April 25, 2016 at 5:58 pm

    I started refinancing our home back in October 2015, it’s now at the end of April 2016, 7 months! Ugh, you thought you waited to long. They nit pick everything, check stubs for back in January, really isn’t 1 or 2 months good enough? Apparently not. Basically, anything you can think of to do with a home, they ask for. I’m surprised they aren’t out here scraping the paint off the walls, to determine what kind we used and if it passed codes, ha ha. Pretty soon folks, they will want DNA samples to prove you’re human. I am at my witts end and ready for a major nervous breakdown. Everytime the phone rings I get depressed because i know…! It’s for an FHA loan, this is our third home, and second refinance we ever did, seeing we are at a 7% rate, and want to get a better rate. When will it end, the world may never know.

    Reply
  7. doug says

    October 6, 2013 at 7:54 pm

    I bought my home three years ago and paid cash for it.
    even states it on my deed. ” full sum paid in cash ”

    now you would think that would be easy. lol it took over 10 hrs. just to get the bank to agree to take the money. the acted as if it was the plague or something.

    and now three years later I found something I wanted to do and looked to borrow only 50% of the home value and it has been 3 months and not looking good. lol

    there was a comment the money you have in your annuity cant be accessed till February 2014 and I said ok?????? so if I wanted to wait a few months I wouldn’t need a loan, and the only one with any risk here is me as I own the house outright and only looking for half the appraised value.

    the loan advisor said ” it doesn’t make sense, I agree with you, thank your government for the excess crap we have to go thru.”

    So as not to give credit to the powers that be……. THANKS OBAMA, CONGRESS,HOUSE.
    just more of the same .

    until you people in Washington can run your own finances, you damn sure should not be involved with anything involving mine!!!!!!!!

    Reply
    • Financial Samurai says

      October 6, 2013 at 8:05 pm

      I agree completely!

      Disappointing to hear the bank won’t let you pull money out easily.

      Reply
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Trackbacks

  1. How Difficult Is It To Get A Mortgage Nowadays? Brutal And Painful | Financial Samurai says:
    June 24, 2015 at 7:00 pm

    […] documented back in 2012 that it took 100 days to refinance my mortgage. It was a painful experience given just two years before it only took 45 days to refinance. I was […]

    Reply
  2. Do Landlords Have The Right To Maximize Rental Profits? | Financial Samurai says:
    June 24, 2015 at 5:31 pm

    […] financing side is independent of the rental side. Just because a landlord is able to successfully go through the gauntlet of refinancing a mortgage to a lower payment doesn’t mean rent should also follow suit. The rental property […]

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  3. How To Get The Lowest Mortgage Interest Rate Possible | Financial Samurai says:
    January 23, 2015 at 8:30 pm

    […] the whole mortgage refinance process could take more than three months, as was the case with my previous mortgage refinance. A good agent should be able to tell you all the necessary documents you need to get things […]

    Reply

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