When you refinance, you’ll go through a similar process to when you closed on your home loan. Yet, it’s good to review what closing requires. It will also help to know how a closing for a refinanced loan is unique.
People Required
The people required to attend closing includes yourself, real estate agent, title company’s closing agent and optionally your lawyer and the lender’s representative according to your state’s laws. No seller is required because its refinancing.
What You Should Expect
Closing lasts approximately an hour within the office of the closing agent. It may also be done by telephone. The documents will be administrated and organized for signing, along with the necessary funds gathered and released by the lawyer, the escrow and closing agents.
Closing Procedure
- All paperwork is gathered, explained and signed including:
- HUD-1 Settlement Statement
- Promissory note
- Truth-In-Lending Statement
- Deed or mortgage - You’ll show evidence of an inspection if needed.
- You’ll bring a current homeowner’s insurance policy showing amount refinanced and policy number.
- You may need to arrange an escrow account with the lender to cover property taxes, payments and homeowner’s insurance.
- If all parties find the paperwork acceptable, you’ll then pay for the closing fees with a cashier’s or certified check.
Documents To Sign
There are 4 important documents that will be checked and/or signed:
The HUD-1 Settlement Statement
This is the final, detailed list of buyer and seller credits and fees according to the contract’s terms.
Prepaid Costs
You might prepay: loan interest, prorated property tax and homeowner’s insurance to cover the time between the closing date and the first monthly payment.
There might be one-time fees including: the application, legal services, title company, points and for the lender. Other fees may include document notarization, messenger delivery and clerical labor.
The Promissory Note
The legal IOU or promissory note represents your “promise” to pay as agreed and includes the payment due dates and mailing payment address.
Mortgage Or Deed Of Trust
This contains the property lien used for collateral if you default. It allows your lender to repossess the home and foreclose on your ownership.
