These dropping rates can also be a great benefit to current homeowners. Refinancing is the process of buying out your current home loan with new financing. This can either come from the same lender or an entirely different one.
The act of refinancing is very similar to the initial closing process. A title company can be a great help throughout the closing process, and also during refinancing.
Here is what you can expect from a title company during the refinancing process:
- Perform a Title Search
- Assist With Closing
- Disbursing Additional Funds
- Benefits of Working With a Title Company
Perform a Title Search
The title search is a very important aspect of purchasing a home. It verifies that the seller is legally allowed to sell the property. It also runs through the associated public records to search for potential issues with the title. This could include liens, unpaid taxes, easements, or any other encumbrances with the property.
A title company will perform this title search during a refinance as well. A new title insurance policy will need to be instituted, and a title search is the first step toward achieving that objective. Changes could have happened since the initial purchase. The lender will need reassurance that there are no outstanding issues with the title to proceed.
Assist With Closing
Homeowners will have to go through another closing process, just like they did when they first purchased the property. There will be a stack of documents that need to be signed, including the promissory note and the finance documents. The title company will then work to allocate the funds to the proper locations.
A settlement statement will be produced, which includes an itemized list of all the fees from the loan proceeds as well as the amount of money that will be sent out. The homeowner will sign this statement during the closing process, along with any documents from the loan.
The title company will enter these documents into the public record which will be used in future title searches.
Disbursing Additional Funds
Refinancing a property is often done in order to receive a lower interest rate on your loan. However, a lower interest rate isn’t the only reason to refinance a home loan. A person has the option to refinance on a home that person already owns with the goal of cashing out the funds.
The new loan amount is set higher than the amount of the initial transaction, and the remaining funds can be used for a variety of purposes. For example, any existing liens on the property can be paid off, as well as any related expenses, with the balance used for home improvements.
At the completion of the closing process, the lender will send the funds to the title company. The title company is then tasked with allocating the funds to their appropriate location.
If the reason for the refinance is to pay off a lien, the funds will be sent to the appropriate location to do so. If the reason is for a direct payout to the homeowner, the title company will send the funds to the homeowner.
Benefits of Working With a Title Company
Your original title insurance will terminate upon refinancing, which means you will have to purchase a new title insurance policy. A title company will help facilitate this new policy. The title search is the first step toward completing this objective, and the title company will provide a policy that will satisfy your lender (if necessary) and may also protect your best interests moving forward.
Liaison Between Parties
The various companies needed to complete a refinance of your mortgage can be difficult to keep straight. Issues found with the title will need to be straightened out, all financial aspects will need to be checked and verified, even city officials might need to be consulted for any zoning issues. The title company takes all of this off of your hands.
All aspects of the refinance process will have very real and meaningful consequences for the homeowner. This transaction is quite likely to be the most important purchase of your life — you want to be sure everything is taken care of as well as possible.
A title company has experience with every aspect of this process. A refinance can be very beneficial to the homeowner and save a lot of money. But any mistakes can complicate matters and lead to long-standing issues.
Rochford Law & Real Estate Title has the knowledge and experience needed to set your refinance down a beneficial path. We’ve helped countless people in the Nashville, TN area to get the most from their home.