When you decide to use a mortgage loan to buy a home or any real estate, you also decide to make a long-term investment. If the market or your financial situation changes during the term of your loan, you may choose to take advantage of your option to refinance your mortgage to change the terms of your loan.
If you’re unfamiliar with how the process works, the thought of refinancing your mortgage may seem daunting, however. So here are the answers to a few frequently received questions about the mortgage refinance process.
What does it mean to refinance a home?
In simple terms, refinancing your home mortgage equates to trading in your current mortgage loan for a new one. When you refinance, your lender will use your new loan to pay off your original mortgage, and then you will make monthly payments on the new mortgage until it is paid off. A mortgage can be refinanced through your current lender or a new one, depending on your qualifications and where you find the best deal.
Typically, people choose to refinance when interest rates are lower than when they took out the original loan. Lower interest rates and a lower principal – because you will have paid down part of the original loan – will result in a lower monthly payment. Refinance can also be used to take a buyer off of a mortgage, like in the case of a divorce.
Do I need a real estate attorney to refinance my mortgage?
While North Carolina state law does not require a real estate attorney to handle real estate refinances as it does during a real estate transaction, it is highly recommended that an experienced real estate attorney guide you through the process rather than going through it alone. This is because any mistakes made during the process can hinder you from clearing the title of your property in the future.
A knowledgeable real estate attorney – like the ones at Starling, Rodriguez & Associates – will help you complete and review your mortgage application to ensure everything is filled out correctly and review your loan documents to make sure the terms on them match those that you agreed to on your initial offer. Ultimately, involving a real estate attorney will protect you during the loan application process and your ability to obtain a clear title on your property when you finish paying your mortgage.
What is the refinance process?
The process for refinancing a mortgage includes many of the same steps as the home-buying process but is typically not as complicated. When refinancing, you will apply with a lender, typically providing them with the same information and documents you did during the home-buying process: proof of income, current debts, assets, credit score, and tax information. After you submit your application, your lender will begin the underwriting process. During that time, they’ll review your application, verify your financial information and the details of your property, and have your property appraised to determine its value.
Your lender will then determine the amount you are qualified to borrow and the terms of your loan, just as they had with the original mortgage. These terms will be presented to you in a closing disclosure, which includes all the numbers for your new mortgage for you to review. Finally, you will go through another closing like you did when you purchased your home, but a refinance closing is a faster process. You and your lender will review the loan terms, sign the loan documents, and take care of any closing costs not rolled into the loan amount. Once the closing is complete, you will have a three-day grace period before you are locked into your new mortgage; during this time, you can exercise your right of rescission to cancel the new mortgage should anything come up.
While you will want to have your real estate lawyer present for closing – although, once again, not required by law – it is helpful to have them with you throughout the entire refinance process to ensure everything is handled correctly.
Let Starling, Rodriguez & Associates help you with your mortgage refinance
When you retain a seasoned real estate attorney, like the ones at Starling, Rodriguez & Associates, to assist you with your refinancing needs, you can rest assured that your refinance transaction application or loan documents match the terms of your agreement. Your real estate attorney will also confirm that the mortgage you are paying off is appropriately discharged. If this isn’t done correctly, it can cause problems obtaining a clear title on your property in the future. Contact our office today to speak with an attorney who can assist you with refinancing your home.