Refinancing Now Takes Longer Than 30 Days

Homeowners refinancing their mortgages will now come to learn the refinance process is taking longer than 30 days.
Here’s the scoop: mortgage-backed securities (MBS) continue to be a very lucrative investment vehicle in these economic times. Safe, conservative returns with a fixed income provides an awfully attractive place to park one’s money considering little volatility compared to individual equities. As a result, mortgage rates remain very attractive with the average 30 year fixed rate mortgage being around 3.5% no points.
This refinance optimism lenders, banks and credit unions are experiencing has translated into higher aggregated volume than otherwise normal operational capacity supports. Daily, lenders are dealing with a radically increased demand for refinance money over purchase money requests. The transition to a larger mortgage volume environment has only been in existence for the last 60 days, but continues to be a challenge for mortgage lending operations.
 Will your refinance close? Yes, although it might take a while. Following is what you can expect moving forward given the positive direction of lower mortgage rates and increased appetite for debt debt restructuring.
  • Large depository banks and financial institutions-mortgage loan origination including both refinance and purchase activity is only  a single division, these banks are also looking for other credit products such as wealth planning, bank account deposits, credit cards and the full banking product menu- in other words, loan origination is not  their prime focus, but rather all the products collectively, expect turn times of 90 days at the minimum.
  •  Mortgage lenders and mortgage brokers– specializing mortgage loan origination only and can facilitate  faster operational turn times, 45 days in most cases.

Homeowner refinancing tips to ensure your loan will close as expediently as possible

→Pick the right mortgage lender by getting a mortgage rate quote upfront and deciding if this person’s product and costs are reasonable enough for you to conduct business with them

→If your mortgage lender/servicier is soliciting you to refinance your loan, obtain in writing how long it’s going to take. Most of the time they’re in the same boat as large depository institutions and they will require all of your financial documentation, best to get a second opinion.

→Let the mortgage professional pull a copy of your credit report and review your financials to make sure you have the best possibility of qualifying for the home loan.

→Don’t take a 30 day mortgage rate lock, if your loan take 45 days to close escrow, the lender or you will have to pay the 15 day cost to extend the interest rate further into the future. Best to consider taking the 45 day rate lock for a slightly higher cost. In fact, most lenders to support the increased volume offer 45 day lock choices for 30 day pricing, another sign that you’re working with a makes sense mortgage company

→Longer lock periods such as 60 days, 90 days or even 180 day rate locks cost more, the longer the lender takes to close your loan, the higher costs loan you will be subject to.

→If you do have to extend your mortgage rate lock, ask the lender to do it for no charge. Most mortgage companies will gladly accept the cost of extending a mortgage rate lock for the opportunity to close your loan.

→Should you attain mortgage approval it will most likely be a “conditional mortgage loan approval“, there are lenders out there that claim to have final loan approval upfront, but that almost never happens in this credit market. What this means, is the mortgage company needs additional information from you to sign off conditions to release your file for final loan documents for a subsequent loan funding. Provide the necessary documentation to the mortgage company within 24 business hours ensures a faster close of escrow.

Why refinance to refinance despite the longer-term times
For many homeowners the opportunity to secure 30 year fixed-rate mortgage, 15 year fixed-rate mortgage or any other fixed rate term with rates in the low to mid-3’s provides an immediate net tangible benefit, many breakeven within 1 year. Today’s mortgage rates make refinancing an attractive tool to help people accomplish their financial goals, borrow money extremely cheaply, create debt relief and reduce interest expense.

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