6 South Street, Suite 201
Morristown, New Jersey 07960
(973) 605.8800 tel
(973) 605.8020 fax
craig@gilgallon.net




Craig Gilgallon NJ Real Estate Lawyer

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.

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.

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.

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 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.

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.

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.

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 “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
craig@gilgallon.net