Close Your Refinance Faster | Tips & VA Guidelines 2023
How long does it take to refinance a VA loan?
According to the ICE June 2021 Origination Report, the average VA refinance loan closed in 60 days.
That’s an average, which means your home loan could close more slowly — or more quickly.
Here are some things you can do to help speed up your refinance.Are you eligible for a VA refinance? Start here to find out (Mar 23rd, 2023)
Can I speed up my VA loan closing?
There are ways you can help your VA home loan close more quickly.
These won’t guarantee that your new loan will close faster but they can help. By being organized and prepared, and by responding quickly to your lender, you can ensure your loan isn’t subject to any unexpected delays.
Close fast with a VA Streamline Refinance (VA IRRRL)
Eligible VA borrowers have access to one of the best refinance mortgage products on the market: the VA Streamline Refinance (also sometimes known as an Interest Rate Reduction Refinance Loan (IRRRL)).
A VA Streamline allows you to lower your interest rate quickly and inexpensively. It’s possible to refinance without income or bank account verification, and without an appraisal. There’s also no minimum credit score requirement.
Fewer requirements mean there’s a lot less documentation for you to prepare — or for your underwriter to review — which means your loan can close that much faster.Check your VA Streamline Refinance eligibility. Start here (Mar 23rd, 2023)
3 tips to speed up your VA loan refinance
The key to helping your refinance move quickly is to be prepared.
Here are a few ways to ensure your mortgage refinance goes as quickly as possible.
1. Get your credit report ahead of time
Your lender will request its own copy of your credit report but it’s important to get your own copies. That way, you can have any errors corrected well ahead of time.
It’s not uncommon for credit reports to include errors that can drag your credit score down. If you request your credit score early and fix any mistakes proactively, you can avoid having to do it once the underwriting process has started, which could delay your home’s closing.
2. Organize your documents
If you gather all your paperwork in advance, you’ll be ready to provide it immediately when your lender requests it. This will help keep your application process moving smoothly and quickly.
Here are some of the documents you can expect your VA lender to request:
- Government-issued ID, such as a driver’s license
- W-2 statements for the past two years
- Tax returns for the past two years
- Current bank statements, including checking, savings and retirement accounts
- Recent pay stubs
- DD-214, Statement of Service or Points Statement (depending on the nature of your service)
- Certificate of Eligibility (COE), which your lender can help you request
For more information, check out our comprehensive documents checklist: VA Mortgage Loan Checklist | Required Documents 2021.
For many of these documents, you’ll need to go straight to the original source, including the IRS or former employers. Some of those requests can take time so it’s best to get started early.
3. Respond promptly to your lender
Throughout the application and underwriting process, your lender is likely to have questions or request follow-up documentation.
By being responsive, you can avoid any unnecessary wait time and keep the whole process moving faster.
4. Document any large deposits
You’ll need sufficient funds in your bank account to cover the down payment and closing costs but lenders will want to know where that money is coming from.
During the underwriting process, your lender is going to want a thorough understanding of the money that’s coming and going from your account. Any large bank deposits — sometimes even as small as $100 — could require an explanation and backup documentation.
So if you’ve had a recent influx of cash or made any unusual deposits in the past three months, be prepared to explain where that money came from. Lenders want to know the cash is really yours, and not a loan or ‘gift in disguise’ from a friend or relative.
5. Slow your spending
Try to hold off on any big purchases until after your mortgage is closed. As with the last point, your lender is going to want a clear understanding of the funds you have available.
This especially applies to any new purchases on credit, like new furniture or a car. Avoid opening lines of credit or running up your balances. Any new debt could delay — or even prevent — loan closing.
Why does it take so long to refinance a VA loan?
VA mortgages typically take a few days longer to close than other loan types.
According to the ICE June 2021 Origination Report, the average VA loan took 7 days longer to close than the average conventional loan, and just one day longer than the average FHA loan. Given the numerous benefits and savings available with a VA loan, those few extra days are probably well worth your time.
Of course, those are average timelines. Some loans will take less time and some will take more.
7 common reasons for delayed closing
Here are a few of the most common reasons your loan closing may be delayed.
- Busy lenders: If loan application volume is particularly high, lenders might be overwhelmed by the extra work. During these periods, they’re not likely to process applications as efficiently.
- Appraisal delays: If your appraiser or home inspector uncovers a problem with the home’s value or structure then your application could be paused while you renegotiate the deal or the seller fixes the issue.
- Government regulations: The mortgage industry is among the most highly regulated in the financial sector. As a result, loans can sometimes be delayed as lenders work to meet all the requirements. This is particularly true of VA loans which are subject to a unique set of VA-imposed regulations.
- Title issues: If there is any confusion about the “title” (ownership rights), it could result in delays.
- Homeowners insurance problems: If the home is in an area subject to regular flooding, earthquakes, hurricanes or wildfires, it may be hard to insure it adequately, which could result in closing delays.
- Credit score changes: Lenders review your credit score again when the loan is close to closing. New accounts, increased balances or missed payments could delay or prevent closing.
- Rate lock expires: If rates have increased since you locked your rate then closing could be delayed.
Some of these are factors you can control and some are not. By staying organized and prepared, you can help the whole process go smoothly — and hopefully quickly!
VA Refinance FAQ
Is a VA Streamline Refinance the best refinance option?
If you’re eligible for a VA loan and your main goal is a lower interest rate, a VA Streamline Refinance is likely to be your quickest option. For eligible military borrowers, it’s one of the best mortgage products on the market.
However, if you want to access your home’s equity, you’ll need to consider a different type of refinance, such as a VA cash-out refinance.
What is a VA cash-out refinance?
A VA cash-out refinance can enable you to access your equity, while sometimes reducing the interest rate on your current loan. Some borrowers use the cash from a VA cash-out refi to pay for home improvements or pay off high-interest debt.
How long does a VA cash-out refinance take?
A VA cash-out refinance takes longer than a VA Streamline Refinance, typically as long as a home purchase loan. This is because a VA Cash-out refinance, which converts your home equity into cash, requires the same documentation as a home purchase loan, including a home appraisal and credit report.
How much is the VA funding fee for a refinance?
If you’re refinancing with a VA loan program (meaning a loan backed by the Department of Veterans Affairs), you’ll need to pay a VA funding fee. This is a percentage of the loan amount, usually between 2.3 and 3.6 percent. The exact amount is determined by variables including the nature of your military service and how many times you’ve used your VA home loan benefit previously.
The VA funding fee is due upfront as part of closing but many borrowers opt to finance their VA funding fee into their mortgage and pay it down over the life of their loan term.
Who is eligible for a VA refinance?
To qualify for a VA refinance, you must meet the requirements for a VA loan.
VA loans are available to veterans, active-duty service members and surviving spouses.
The first step to determining your VA eligibility is to request your Certificate of Eligibility (COE), which includes details about your military service, along with the exact amounts of your VA loan benefit and VA funding fee. A mortgage loan officer who has experience with VA loans can help you request your COE.
How soon can you refinance with a VA loan?
To refinance with a VA loan, you must have had the mortgage for 210 days or long enough to have made 6 mortgage payments, whichever is longer.
When should you refinance?
The best time to refinance your mortgage will depend on your unique financial situation and goals. By refinancing your current mortgage, you could reduce your interest rate and your monthly mortgage interest payments.
A refinance may also enable you to access your home equity, or even get rid of mortgage insurance if you’re refinancing from another type of mortgage.
Of course, refinancing will reset the clock on your mortgage. The longer you’re paying off your home means more total interest paid over the life of the loan. Our mortgage calculator can help you crunch the numbers and determine whether a refinance can help you save money.
Get started on your VA loan refinance
There are practical steps you can take to help your VA refinance close as quickly as possible.
There are no guarantees but with some preparation and organization, you could be on your way to a lower mortgage rate and lower monthly mortgage payment.Ready to refinance? Start here (Mar 23rd, 2023)