How Long Does Refinancing take?

Refinancing remains a popular action by current home owners given the ongoing lower interest rate environment despite an greatly improving economy. The Federal Savings Bank offers a list of helpful notes to refinance now.

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VA and FHA home loans at The Federal Savings Bank

The Federal Savings Bank

Getting an appraisal often takes the most amount of time in the refinancing process.

Chicago, IL (PRWEB) December 10, 2013

The economy is changing for the better with interest rates fluctuating with it. Over the past few years, mortgage rates have experienced volatile transitions to their historic lows, many homeowners to apply to refinance their loans. With lower interest rates worked into loan terms, it is possible to have a low cost mortgage. However, The Federal Savings Bank wants informs their reads with the following tips such as additional costs and process time that can be more than many homeowners anticipate.

Economy
The economy is improving, quarterly GDP growth has been positive for the past 10 quarters, unemployment is dropping, all while inflation remains in check. However, due to the improving economy the Federal Reserve will soon end its asset repurchase program and the resulting effect will be significantly increasing interest rates. Thus current lien holders who have not yet refinanced their home loans are lured to refinance.

Applying
The first step for homeowners to take is to apply for refinancing. This will typically happen when mortgage rates are reduced with the goal to lower their monthly mortgage payments. Applications can include a lot of information such as credit reports, tax reports and job and income verification, as well as history about the property. Having a complete and accurate application can reduce delays from a lender needing more information.

Underwriting
Once a mortgage refinance application is submitted, the underwriter will use the information and run a credit check. They will confirm tax records and employment status, calculate what is affordable and check to see if the borrower will meet the lender's requirements. An application is either approved or rejected by an underwriter and the process cannot be closed without approval. If an underwriter requires more information, such as other bank statements, the process could take more time.

Appraisal
Getting an appraisal often takes the most amount of time in the refinancing process. Not all refinances will require an appraisal, although a bank or lender may request one. To conduct an appraisal, a homeowner must hire a professional to assess the value of the property. A higher appraisal can be beneficial for homeowners by raising the equity of their home.

Closing
After considerations like the appraisal have been completed and a borrower has met the lender's requirements according to an underwriter, the mortgage refinance can close. New loan terms can come with fees that run in the thousands of dollars, so borrowers need to take this into consideration when applying. If there isn't a lot of time left on a loan, refinancing may be costlier than leaving the interest rate as is.

VA loan refinance
For eligible veterans who already have a VA home loan, refinancing is a little different than doing so with other types of loans. With a VA Interest Rate Reduction Loan, veterans can decrease their monthly payment by getting a reduced interest rate. Similar to other refinancing options, a VA home loan can be changed from an adjustable-rate mortgage to a fixed rate. When switching to a fixed-rate mortgage, it is possible the interest will increase.

What is most beneficial for a lot of veterans is that refinancing a VA home loan can be done without any out-of-pocket costs, unlike other options. Instead, closing costs and other fees are adjusted into the new loan terms, either through a higher interest rate or included in the overall amount of the loan.

These options are only available for those who have used their VA home loan eligibility on a property. No other types of loans are allowed to use this option. A veteran also only needs to prove they occupied the residence at one time before applying for refinancing.

Contact the Federal Savings Bank, a veteran owned bank, to explore find the best mortgage refinance rates.


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