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Why is refinance taking so long? Can I back out?

I started getting quotes from 3-4 lenders in late July for an FHA streamline refinance. Finally settled on a lender b/c of the good reviews here on zillow. Initial documents were signed and sent Aug 3, appraisal done Aug 13, appraisal docs got to him Aug 19. He had said closing would be soon after receiving appraisal docs, but nothing has happened since then (going on 21 days now). I understand the refinance boom, but what is the mechanics of closing? Bunch of paper pushing to the right people? Why is the system like this? What else needs to be done? Nobody is able to explain the steps to me. Why are lenders so fast and eager to get your business, but once the appraisal payment clears, nothing happens? The original documents I signed said closing approx. 20-25 days, and he said 2-3 weeks, and others said a week or two. So I feel misled, since I could have chosen others who had no appraisal fee/same rates, but went with him thinking this would close in late Aug to avoid extra month of mortgage insurance and interest payments. Also, the rates keep dropping, and I am locked for 60 days until Oct 4, so I can't take advantage of that. That is also when the higher FHA MI kicks in. Could this go into Nov? Can I back out? I doubt anyone else can close me before the higher MI? Seems like I have to file new paperwork also. Thanks for listening to my inner frustrations.

-Naive homeowner

  • September 08 2010 - US
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Answers (6)

Yes, you can back out, however,  you will not be reimbursed for the loan application fees.  

It is usually takes 8 weeks to close an FHA loan.  Since you applied on Aug. 3rd, you have gone way past that.  Have you spoken with the lender to find out what the issue is?  Is there a problem with the house?  If you cannot get the lender to return you calls then I would find out who the supervisor is and start with him/her.  

  • November 30 2012
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Profile picture for DanRibreau
6 Months in and we've yet to close.  BOA continues to tell us they'll call us back and we don't hear from them.  Constant excuse making and unexplained delays.  6 months?  Come on!
  • November 30 2012
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"If your going through a bank - I feel they lie like crazy - if you paid for your appraisal you own it.  Get the appraisal and go to a broker and have them give you wholesale rates and good service. 
Truly your time frame is not bad.  I got a call yesterday from a customer switching away from a big banks b/c he was going on his 5th month to do a cake-walk refi.
BUT it is true - if you have a case number your set and don't have to worry about the increase.  You'll be saving yourself and everyone a huge unnecessary trama if you don't gain patience.
Let me vent a little while on this subject. ---
.. customer comes in and asks Loan Officer how long with my refi take?
.. loan officer answers honestly and says 45 to 60 days.
.. customer thinks that is too long and goes to another Loan Officer who says 30 days no problem.  This loan officer gets the loan - doesn't close on the 30th day and puts the customer on hold or doesn't answer the phone or has one excuse after another.  He takes 50 days to close the loan.
Please read that over again.
Look at who got the loan.
Hope this sheds some light."
Have a nice day!
Sincerely,
Celia

  • September 10 2010
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Right now, turn times have been longer than usual.  With rates being so low, precessing and UW are having difficulty keeping up.

Is the lender approved by FHA to underwrite their own loans?  That could impact turn times the most if they have to outsource the underwriting. 

Most FHA loans that are kept in house are taking the full 30 days to close, and in some cases 45. 
  • September 09 2010
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The ones that had no appraisal fee but otherwise same rates/fees menat you would be paying those fees out of pocket, not rolling them in. The one with the appraisal is letting you roll them in.

You're already in your house, what's the rush? The ones touting they could take your app today and close by the 24th have no respect for their processing and underwriting staff, or have no business, either way is that who you really want to work with?

pushing papers got us in the mess; these days people actually have to look at the papers. 
  • September 09 2010
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21 days is not unreasonable.  Most of the big boys are taking 90+ days to close. 
  • September 08 2010
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