Refinancing offers multiple benefits to homeowners. In most cases, they can borrow at a lower interest rate. A homeowner can also borrow additional money used to make improvements on the property. For some, it’s a chance to pay off debt. The refinance process works a lot like the original loan process. The homeowner applies for a new home loan, pays for an appraisal, and goes through a formal closing. Refinancing also includes the service of a title company. Here’s how the role of a title company works for a real estate refinancing.
New Title Search
Lenders always want to ensure that borrower has title to the property they’re trying to refinance. They want a guarantee that they’re approving a loan for the legal owner of the property, not someone trying to commit property fraud. The lender will also want to know about liens or judgements against the property.
As the homeowner, you might wonder why you need a new title search since you had one when you bought the home. Changes, even those you’re unaware of, could have occurred since your original title search took place. A new search and examination is evidence to the lender of a free and clear title
A Clear Title
Sometimes issues show up on the new title search that weren’t revealed on the original search, or as mentioned earlier, something on the title changed. If an issue pops up, it’s the title company that can help the borrower clear them up. A tile company has experience researching the cause of the problem. Whether it’s a lien, a judgement, or property title fraud, they can help put you in contact with the proper people to get the title issue taken care of.
The homeowner is still responsible for providing official paperwork that proves they’ve legally cleared the issue. Once the title company receives the paperwork, they then clear the title for you.
New Title Insurance Policy
There’s often confusion over the subject of title insurance. If you purchased an owner’s policy when you bought your home, that policy is still active. However, when you refinance, the lender will require a new lender’s policy. That’s because the one you bought when you purchased the house is only valid until the loan is paid off.
A new loan means a new policy, and the title company provides the lender’s insurance. While you don’t need to buy another homeowner’s policy, you may want to consider adding title fraud protection to your portfolio.
The Title Company May Handle Closing
When you refinance, you attend a closing meeting where you sign your new loan documents. If the title company handles the closing, their agent prepares a settlement statement. This document lists any bills paid from the proceeds of the loan such as a current mortgage. The settlement statement also lists the amount of the borrower’s disbursement.
At a refinance closing, the borrower signs all closing documents, including the new promissory note and mortgage. The title company’s closer files the mortgage with the county recorder’s office.
Congratulations on your refinance! It’s always a relief when a real estate transaction closes smoothly. Knowing your title is clear also brings peace of mind. In a time when deed fraud is prevalent, it’s comforting to know you do have access to property title protection. For more information on how our team here at Secure Title Lock uses property fraud alert and other resources to protect your title, contact us today!