What
is a refinance transaction?
During
a refinance transaction, the borrower, the current owner
of the
Property, obtains a new mortgage, and the old mortgages are paid off
and discharged of record. Usually this is done because the owner,
now the borrower, has obtained a more favorable interest rate or
better terms. Sometimes, people refinance in order to take the
equity out of their home.
Top of Page
What
does the attorney do for the borrower in a refinance transaction?
The
attorney will review the loan commitment, order the title search,
and prepare the transaction for closing. The attorney will also
submit a complete closing package to the new lender, complying with
all of the lender's title requirements, prepare the closing
statement, and conduct the closing. In addition, the attorney will
order a new survey if required and asked to do so by the borrower.
After the closing, the attorney will record all necessary
documents and pay off existing mortgages as applicable.
Top of Page
Why
do I need to obtain a new title search and title insurance for a
refinance transaction?
This is a very commonly asked question. Each time that you refinance, or
put a new mortgage on the property, it is considered a separate
event. If there is a new lender, or simply a new loan, that new
loan must be insured. In addition, a new title search must be
obtained to make sure that there have been no intervening liens,
or title defects since the time that you purchased or last
refinanced the Property.
Top of Page
What
is the cost of title insurance for a refinance transaction?
For a refinance transaction, a new lender's title insurance
policy must be issued, not a new owner's policy. As such, the cost
of the title insurance should be less then when you purchased. The
cost of title insurance is regulated by law, and in the case of a
refinance will be based on the amount of the new loan.
It
has been our experience that the costs for title search and
insurance set forth on the Good Faith Estimate provided to you by
the lender, are most
often incorrect and are lower than
the actual fees. Please refer to the charts on this website for title charges.
You can save money on title
insurance if you provide our office with a copy of the title
policy that was issued to you when you purchased the Property. If
the title company is provided with this “back title”, and the
policy is less than ten years old, they are
permitted to charge you less for the updated title insurance/searches. We
encourage you to provide us with a copy of your existing title insurance
policy so
that you can avail yourself of this reduced rate.
Top of Page
Do
I need a survey for a refinance transaction?
The
answer to this question depends on your lender. Most lenders will
accept your current survey depending upon its age and provided
that you can sign a “Survey Affidavit of No Change.” You must
check with your lender to see what their survey requirements are.
You will be able to sign a “Survey Affidavit of No Change” if
you have not made any changes to the property or the structures
since the date of your most recent survey. Of course, you will
need to provide our office and the lender with a copy of your
survey. It is our policy not to order new surveys for a refinance
transaction unless the client specifically requests us to do
so.
Top of Page
What
about the homeowners/hazard insurance?
Check
your mortgage loan commitment. The commitment will likely specify
that you need to obtain insurance, insuring the new lender and the
new loan amount. Most lenders will not permit you to close unless you
have provided them with a declaration page from the insurance
policy together with a receipt evidencing that you have paid for
the policy for one year in advance.
In most cases, these insurance
items must be submitted to the lender, before they will even
permit us to set a closing date. You must refer to your loan
commitment for the exact language that your lender requires. Most lenders are very precise
with this requirement. It is advisable to send
us copies of all insurance
information that you provide to your lender.
Top of Page
Is there an
actual closing for a refinance?
Yes, the closing will occur at our office. The procedure is
essentially identical to a purchase transaction, except that there
is no Seller. You will need to be present, together with your
spouse or partner, if applicable. One of the attorneys of the Firm,
will review and explain all of the documents to you and will
conduct the closing.
Top of Page
Do
I need to bring money to the closing?
That
depends. If you are “cashing out” you may actually be getting
money from the closing. If money is due to you from the closing,
the money will be available to you on the third business day
following the closing. This is because there is a Right of
Rescission in most refinance transactions.
If
you are not cashing out, you will likely need to bring a check to
the closing. The check will have to be a Bank Check or a Cashiers
Check, made payable to “Amy Alkoff Chasin Attorney Trust Account”. If
you need to bring a check to the closing, the actual amount will
be provided to you a day before the closing by one of the Firm’s
real estate paralegals. Personal checks can not be used at
closing.
Top of Page
What
happens after the closing?
Following
the closing, this office will attend to all of the post-closing
aspects of the transaction. Within a few weeks after the closing,
you will be provided with all of the relevant documents from the closing. You
can expect to receive a statement or coupon book from your new lender so
that you can begin paying on your new loan. If you don’t receive
either, please contact your lender directly. Many lenders allow
you to have the monthly payments deducted automatically from your
bank account. Check with the lender if you are interested in that
feature.
Top of Page |
