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What to Expect from the Refinance Application Process

Applying for a mortgage refinance involves several steps and documentation requirements. Understanding what's coming helps you prepare and complete the process faster.

Documentation You'll Need

Prepare these documents in advance to accelerate your application:

• Recent pay stubs — Last 30 days (2-3 pay periods)
• W-2s or 1099s — Last 2 tax years
• Tax returns — Last 2 years, complete with all schedules
• Bank statements — Last 2-3 months for all accounts
• Investment account statements — Retirement accounts, brokerage accounts
• Current mortgage statement — Most recent from BSI
• Homeowners insurance policy — Declaration page
• Property tax bills — Most recent
• Government ID — Driver's license or passport

Self-employed borrowers need additional documentation:

• Business tax returns (last 2 years)
• Year-to-date profit and loss statement
• Balance sheet
• Business bank statements

The Application Timeline

A typical refinance timeline looks like this:

1. Day 1 — Complete online application (10-30 minutes)
2. Day 1-3 — Rate quotes from participating lenders
3. Day 3-7 — Select lender, provide initial documentation
4. Day 7-14 — Loan application review, appraisal ordered
5. Day 14-21 — Appraisal completed, underwriting review
6. Day 21-30 — Underwriting approval, closing scheduled
7. Day 30-45 — Closing and funding

Total time typically ranges from 30-45 days for straightforward refinances. Complex situations (self-employed, unique properties, credit issues) can take 60-90 days.

Credit Score Impact of Applying

Understanding how the application affects your credit:

Soft Credit Pull (Rate Quotes)

Getting rate quotes typically uses a soft credit inquiry that does not affect your credit score. Our application form uses soft pull technology, so getting quotes is safe.

Hard Credit Pull (Formal Application)

Once you select a lender and formally apply, a hard credit inquiry occurs. Impact:

• Typically 3-5 point drop temporarily
• Score recovers within 3-12 months
• Multiple mortgage inquiries within 45 days count as ONE inquiry under FICO — This lets you shop with multiple lenders without additional score impact

Refinance Cost Breakdown

Typical closing costs for a refinance:

• Origination fee — 0.5% to 1% of loan amount
• Appraisal — $500 to $800
• Title insurance — $1,000 to $2,500 (varies by state)
• Title search — $200 to $400
• Attorney fees — $500 to $1,500 (some states require attorney)
• Recording fees — $100 to $400
• Prepaid property taxes — Based on your county tax rate
• Prepaid insurance — 12-14 months typically
• Escrow account setup — 2-3 months reserves

Total closing costs typically run 2-5% of the loan balance. On a $300,000 refinance, expect $6,000-$15,000 in closing costs.

No-Closing-Cost Refinance

Some lenders offer "no closing cost" refinances where closing costs are rolled into a higher interest rate. Whether this makes sense depends on:

• Your interest rate increase vs. avoided upfront costs
• How long you plan to stay in the home
• Your break-even calculation

What Affects Your Refinance Rate

• Credit score — Higher scores = lower rates (740+ typically gets best rates)
• Loan-to-value (LTV) ratio — Lower LTV = better rates (below 80% LTV avoids PMI)
• Debt-to-income (DTI) ratio — Below 43% typically required, below 36% preferred
• Property type — Primary residence = best rates; investment = higher rates
• Loan type — Conventional vs FHA vs VA vs USDA have different rate structures
• Loan term — 15-year rates typically lower than 30-year
• Discount points — Paying upfront points reduces long-term rate