Your Questions Answered About Refinancing

If you consider refinancing your home, you undoubtedly have some questions, such as How does refinancing work? What are the average costs to refinance? What are the title company's responsibilities?

The refinancing process may be a confusing experience if you've never been through it before. Here are answers to some of your questions:

HOW DOES REFINANCING WORK?

When you purchase a home, even though you have the full intention of making the mortgage payments, sometimes issues arise that keep you from making your financial obligations. Refinancing your home is a way to reduce your monthly mortgage payment. 

In the case of a divorce, you may need to refinance your home to remove your ex's name from the mortgage

Or on a positive note, you may choose to refinance because improvements in your credit score will now help you obtain a lower interest rate.

WHAT DOES "REFINANCING" MEAN?

A refinance loan is a second loan used to pay off the first one. When you refinance your home, it's typically necessary to pay off the original loan first. 

WHAT ARE THE AVERAGE CLOSING COSTS TO REFINANCE?

The closing costs of a refinance are between 2 and 5 percent of the loan. That means a 15-year-fixed mortgage at 2.35 percent will cost approximately $660 for each $100K borrowed. That said, many different factors can impact the price, from the type of loan you are seeking to your credit score. It's important to remember that each case is unique. 

DOES REFINANCING MEAN I GET A NEW TITLE? 

When you decide to refinance your home, the first thing your title company must do is search the public records to confirm ownership. In most cases, you will not be issued a new title at the end of the process. 

An owner's title policy is purchased at the original closing. For each separate loan transaction, you can purchase a loan policy. Once you are confirmed as the current property owner, you will be able to submit your owner's title policy to your title company to acquire a reissue credit.

A new title is only provided at closing if the "current vesting" (the property owners' name) changes. For example, if your new mortgage doesn't include your ex-spouse's name, you will need a new title.

WHY DO I NEED TITLE INSURANCE ON A REFINANCE?

First, it is essential to understand that title insurance is significantly less costly than many other types of insurance policies you might buy. That's because instead of paying a monthly premium, you pay a one-time fee at the time of the closing. In return, you get proof that you are the legal owner of your property. This ensures that past events (even ones you are unaware of) can not result in the loss of your ownership. Additionally, it is customary for both lenders and owners to purchase title insurance at the closing, so each party to the loan is protected. 

Mortgages are backed by securities. That's why investors must be confident that the title is "free and clear" of all encumbrances. Title insurance provides your lending institution with this confidence. Without title insurance, it would be too challenging to back mortgages with the necessary assets, and investors would be too wary of the risk. 

WHAT DOES THE TITLE COMPANY DO? 

The first responsibility of a title company is to conduct a title search to establish the legal property owner. This process may also reveal information that the lender might find relevant. For example, the title search may indicate that the property owner has had a judgment filed against them. If this is the case, the lender could require the owner to pay the judgment before starting the refinancing process.

Title companies are typically involved in the closing. When a lender has reached an agreement with a property owner and is ready to provide them with a loan, a title company will prepare a settlement statement. This document explains how the loan funds will be disbursed to the borrower. It also will show how the funds will be used. For instance, if a loan is being issued for the payment of several bills, the settlement statement will list them accordingly.

Sometimes the title company is involved in the disbursement of funds as well. There are instances when a lender will provide the agreed-upon loan to the title company instead of directly to the borrower, which often happens when the settlement statement includes other parties besides the borrower, who are also entitled to payment.

In general, the title company may also serve as a liaison between the various parties involved in refinancing. These can include not only borrowers and lenders but attorneys, surveyors, government employees, and more. Because refinancing can involve many steps, with many issues to resolve before closing can occur, it helps to have an intermediary who works with everyone to move the process along smoothly.

That's one of the primary reasons for working with a title company during refinancing is beneficial to all parties involved. By assisting in key steps and coordinating with various organizations and individuals, title companies ensure refinancing is more efficient.

At Homestead Title, we understand that refinancing a home can seem like a lengthy and overwhelming process. Every step of the way, we work with all relevant parties to help make it easier. To discover more about what we can do for you, contact us today.

Thinking of Downsizing - Here are Some Useful Tips!

Moving into a smaller home may be awkward at first, especially when you are used to having more room. If it seems like now is the right time to downsize, here are some helpful tips to help ensure it is a smooth transition. 

TRIM DOWN YOUR BELONGINGS.

One of the most complex parts of downsizing is paring down the amount of "stuff" you plan to bring to your new home. Decluttering is a great start to getting your move headed in the right direction. Sort the things you want to donate, keep, or sell first. Consider putting the items you are unsure about into self-storage rather than bring them into your new home. 

MAKE A PLAN TO UNPACK.

When you are ready to unpack and get organized, start unpacking with the closest areas first. By establishing an organized storage plan right from the start, you can begin life in your new home uncluttered. 

KEEP AN OPEN FLOORING PLAN.  

There are benefits to keeping your new home's floor space open. Since you will have a reduced amount of square footage, open floors offer more flexibility. For example, you can alter your rooms' layouts by moving furniture and accessories around as needed for activities. 

You Even if you are healthy and able-bodied right now, growing older often brings mobility concerns. By sticking with open traffic areas, you will also reduce slipping and tripping hazards. 

MIX THINGS UP.

When you're ready to decorate, try blending some of your new furnishings with old ones. You might have to part with the king-sized bed and the overstuffed sofa, but incorporating a few pieces from your old house will help you keep your space familiar. Try putting out some plants, hanging wall art, or adding new window treatments to help you get settled in. Opt for lightweight and light-colored window treatments to help your rooms feel sunny and airy. Try keeping your walls in light colors to make spaces feel bright and open as well.

Settling into a new, smaller home can be a challenging transition. However, if you cut down on clutter, opt for an open arrangement and keep innovative strategies in mind when organizing and decorating, your downsize will feel like the perfect fit!

Homestead Title is a full-service title and escrow company. Since 1934, we have provided our customers with competent, thorough, and professional service. Prior to each closing, we search public records to clarify legal and financial risks for lenders, realtors, and other stakeholders in the real estate transaction process. Our energetic and capable team of real estate title professionals provide accurate investigations, rapid turnaround time, streamlined paperless delivery, and exceptional customer service. For more information, call us at (504) 581-6427 and let us provide you with a smooth and efficient real estate closing.

A Title Company’s Role in Refinancing - A Quick Guide

Despite your original commitment to timely mortgage payments, unexpected difficulties can create hardships. When these problems take you by surprise, refinancing may be an option for you to try and lower your mortgage payments. Communicating with your lender will definitely assist you in your search for a lower interest rate.

Refinancing a home can be overwhelming to those new to the process. In accordance with our commitment to thorough and competent service, we'd like to offer the following quick guide to refinancing.

In loan refinancing, you are addressing the outstanding original loan by using a new loan to pay it off. Closing costs for refinancing can range from anywhere to 2-5%, with the average being 1.5%. Your interest rate, credit score, and type of loan are among the chief factors that determine your payment. 

During refinancing, you or your lender will choose a title company for research purposes. The title company’s responsibility is to determine that you are, in fact, the owner of the property. This evaluation is normally completed through a title search. The title company is also looking for factors such as outstanding judgments that the lender could ask to be paid before proceeding with refinancing.

Those who choose to go forward with refinancing may be curious about title status and have questions about title insurance.

* Title insurance isn’t paid through monthly premium, but instead by a one-time fee at closing. The lender seeks protection through title insurance at the time of closing. 

* Title insurance promotes investor confidence as mortgages are security-backed. Investor risk is minimized through title insurance.

The lender will provide you with a closing disclosure, which outlines how the loan will be disbursed and used. Ultimately, a title company acts as a go-between, or intermediate party, for all of those involved in refinancing, ensuring the process is free of headaches. 

 At Homestead Title, we handle the coordination of all parties of interest so that your refinancing runs efficiently. We also take the time to ensure that all documents are in order, so that you will experience a “smooth road” to refinancing. Call us today at (504) 581-6427 if you have any questions or would like further information on how we can help you.