What is a Refinance?
Owners of existing homes will often seek new financing to replace their mortgage financing for purposes of obtaining a lower interest rate; obtaining cash equity out of their home or lowering their monthly payment. A refinance will replace your existing first mortgage. Many lenders offer second mortgages or home equity loans that generally complement a first mortgage. We recommend at all times that an attorney review any transactions that will result in a lien being placed on your home.
Should You Refinance? Refinancing can be a great financial move if it reduces your mortgage payment, shortens the term of your loan or helps you build equity more quickly. When used carefully, it can also be a valuable tool in getting your debt under control.
MY LENDER SAYS THAT THEY CAN COMPLETE THE REFINANCE THROUGH THEIR TITLE COMPANY WITHOUT INCURRING AN ATTORNEY CHARGE?
Lenders often attempt to circumvent attorney participation or someone "overlooking" their shoulder. The truth is that often home owners are directed to title companies by lenders under the quise of lower closing costs. Title companies often charge HIGHER costs including a state mandated settlement fee of $350.00 that is often not disclosed. Other incidental charges that are not charged by attorneys can bring your closing costs higher than a full service law firm that provides you with legal representation and assurance that all your rights and interests are being protected. Lenders cannot force you to use their title company and must at all times provide you access to your legal counsel.
WHY DO I NEED TO PURCHASE TITLE INSURANCE AGAIN?
Your legal counsel can request a refinance, re-issue rate which is the lowest title insurance rate available in New Jersey. Unles you insist on this rate, you may be charged a higher title insurance premium. Included in your title insurance premium is the cost to research your property that is necessary for your lender to complete the closing. In addition, the new leander will require new coverage to cover their interests in the transaction.
WHAT ABOUT MY HOMEOWNERS INSURANCE WHEN REFINANCING?
When you intend to refinance your home, you will need to obtain the "Loss Payee Language" from your new lender which is their official name and mailing address. You should request your Insurance Company to add the new lender to your policy and obtain a new Declaration Page and paid receipt for closing.
DO I NEED A SURVEY?
Unlike the requirement to have your title insurance re-issued, you may use your existing survey in most cases provided you have an original survey with a surveyor's seal. The use of the existing survey is permitted provided no additional improvements have been placed on the property to permit you to sign an Affidavit of No Change at closing. In the event, you have built a deck, swimming pool, garage or other permanent improvements on the property, you may need to obtain a new survey.
AM I REQUIRED TO OBTAIN A CERTIFICATE OF OCCUPANCY OR SMOKE DETECTOR CERTIFICATION?
NO, only when the property is being sold are these certificates required.
HOW WILL MY EXISTING MORTGAGE BE PAID OFF?
Any existing mortgage will be paid off at the time of your refinance.
IS THERE AN ACTUAL CLOSING FOR A REFINANCE?
YES, you will be required to come to our Offices to execute your new loan documents on the day of you refinance. New Jersey requires a 3 day right of Recession that allows you to cancel the transaction anytime during the first 3 business days after your closing date. All funds will be disbursed after the expiration of the 3 days.
HOW WILL I KNOW WHAT MY CLOSING COSTS ARE AND WILL NEED TO BRING FUNDS TO CLOSING?
Your lender will provide you within 10 days of your loan application, a "Good Faith Estimate of Closing Costs". This will provide a detailed estimate of closing costs associated with your mortgage and closing. The lneder will provide actual figures approximately 24 hours prior to closing. All figures will be illustrated on a Settlement Form called a HUD or RESPA Settlement and will be carefully reviewed at time of closing. The firm will provide you with the final amount necessary to bring to closing soon after it is provided to the firm, which is generally the day prior to your closing. Most often, however, you will be receiving funds after your refinance as your loan counselor will incorporate closing costs in the new refinance amount.