How Long After Refinance Do I Get Money?

Homeowners often leverage their property’s value to secure additional funds. This process typically involves replacing an existing mortgage with a new, larger one, providing a lump sum of cash. Understanding the timeline for receiving these funds is important. This guide explores the stages of accessing cash from home equity, from application to disbursement.

Understanding Cash-Out Refinance

A cash-out refinance allows homeowners to convert home equity into a lump sum of cash. It replaces an existing mortgage with a new, larger one. The new loan pays off the current mortgage, and remaining funds are disbursed to the homeowner.

Homeowners often choose this option for various financial objectives. Common uses for these funds include consolidating high-interest debt, financing significant home improvements, or covering educational expenses. Cash available depends on the home’s appraised value and lender’s loan-to-value (LTV) limits, often up to 80% for conventional loans.

The Refinance Closing Process

Refinance closing marks the loan’s formal completion. Homeowners sign legal documents, including the new promissory note and Closing Disclosure. A closing agent, often representing a title company, oversees this signing, ensuring all paperwork is correctly executed and legal requirements are met.

The new mortgage replaces the old one, establishing new loan terms and payment schedules. Homeowners receive a Closing Disclosure at least three business days before closing to review terms and costs. Cash-out funds are not immediately available at closing, despite signing all documents.

The Right of Rescission

The legal right of rescission influences the timeline for receiving cash-out funds. This consumer protection is mandated by the Truth in Lending Act (TILA) and allows borrowers to cancel certain types of home loans without penalty. For primary residences, this right applies to cash-out refinances, home equity loans, and lines of credit. However, it does not apply to loans for purchasing a home, investment properties, or second homes.

The rescission period typically lasts three business days. It begins after the borrower signs the credit contract, receives the TILA disclosure (often the Closing Disclosure), and receives two copies of the notice explaining the right to rescind. Business days for this period include Saturdays but exclude Sundays and federal holidays. Lenders are legally prohibited from disbursing any funds until this three-day period has elapsed and the borrower has not exercised their right to cancel the loan.

Fund Disbursement Timeline

Once the three-business-day right of rescission period expires and the lender finalizes loan funding, cash-out funds can be disbursed. This typically occurs within one to three business days following the rescission period. The title company, which facilitated the closing, is responsible for managing this disbursement.

Funds are commonly transferred through a wire transfer directly to the homeowner’s bank account, which is generally the fastest method. Alternatively, a check may be issued. Minor delays can occur due to bank processing times, or if the rescission period ends on a weekend or holiday, pushing disbursement to the next business day.