What is a refinance
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
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
Why do I need to obtain a new
title search and title insurance for a
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.
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.
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.
Do I need a survey for a refinance
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.
What about the homeowners/hazard
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.
Is there an actual closing for
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
Do I need to bring money to the
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 “Craig S.
Gilgallon 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.
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.
For More Information,
Contact us at:
The Law Firm of Pawar Gilgallon & Rudy, LLC
6 South Street, Suite 201
Morristown, New Jersey 07960
(973) 605.8800 tel
(973) 605.8020 fax