With mortgage rates near historic lows, there is a new rush to refinance by existing homeowners.
Refinancings now account for about two-thirds of all mortgage applications, and all that volume means the process is taking some time.
“On average, the industry is taking anywhere from 40 to 60 days for an application to close,” Joel Kan, at the Mortgage Bankers Association in D.C., told WTOP.
“Our estimate is for high volume to close in the third quarter with some of that being pushed into the fourth quarter just because of the high volume of applications we’re seeing come in right now,” he said.
Refinancing applications take the same amount of heavy paperwork and documentation as a purchase application, even generally if you are refinancing with your existing lender.
If you are going to refinance your mortgage, you need to consider more than just the lower rate.
“You have to factor in the amount of home equity you have right now, the expected length of time you might want to spend in the house going forward, and whether you want to change the type of mortgage you have, such as changing it from a 30-year to a 15-year fixed,” Kan said.
Fees associated with completing a mortgage refinance typically run between 1% and 1.5% of the total loan amount.
Lenders are making money off the refinancing boom.
The MBA says mortgage banks and mortgage subsidiaries of chartered banks report a net gain of $1,675 on each loan they originated in the second quarter, up from a net gain of $285 per loan in the first quarter.
That is the best production profit MBA has seen since the third quarter of 2016, from both higher production and a significant decline in expenses. The drop in production expenses last quarter was the largest quarterly decline since at least 2008.
