With interest rates still among the lowest in recent years, refinancing your home loan may be something you wish to consider. Refinancing a mortgage can be beneficial in a number of scenarios, from reducing interest rates and monthly payments to replacing one type of mortgage product with another that better serves your needs. Some homeowners even refinance to cash out a portion of the equity accrued in their properties.
If you have never refinanced a home loan before, you may be wondering if and how the closing process differs from the initial sale. Read on to learn what you need to know when preparing to close on your refinance loan.
Refinance vs. Initial Sale Closing: What Is the Difference?
Some people are surprised to learn that refinancing an existing mortgage still requires the formal process of a settlement, or closing. While there are a number of general similarities between closing on an initial sale and a refinance, the process of refinancing differs in a few ways:
• Time: Though the same number of steps must be taken during the loan approval process, the time from application-to-close is slightly faster with a refinance loan when compared to the initial sale. On average, the timeframe is between 30 – 45 days.
• Closing Costs: While you will still be responsible for closing costs when refinancing your mortgage, the overall percentage may be less than what you paid during your initial purchase. Refinance loans generally carry no fixed costs.
• Title Insurance: If an Owner’s Title Insurance policy was purchased at time of sale, then a re-issue rate is given on the Lender’s Title Insurance policy for the refinance loan.
What to Bring to the Closing Table
Closing day is generally the same, whether you are purchasing a home or refinancing an existing loan. The items you will need to bring to your refinance closing include:
- Government-issued identification
- Certified check (in the exact amount due)
- Proof of homeowner’s insurance
Have other questions about closing on your refinance loan? Get in touch with the team at Linear Title & Escrow today!