What Happens Before a Refinance Loan Is Funded?

Homeowners will always look for a break on their mortgage payments, and there are many homeowners today that are applying for refinancing because of lower interest rates. In fact, the number of homeowners who are applying for refinancing is on the rise since 2008. Interest rates are low and home values have dropped significantly over the past few years. In order for homeowners to deal with today’s tough economy, they will need a break on their mortgage payment. Paying a lower monthly interest payment on a mortgage may be the solution that many homeowners are looking for.

From the time a homeowner applies for a loan, to the time the loan is approved, there is significant work that must be accomplished. In other words, the refinancing process isn’t all that simple as many people are led to believe. The application process is the first step that homeowners must take when attempting to refinance their loan. Individuals who are interested in refinancing their loan are advised to speak to a loan officer in order to be aware of the options that are made available to them. Loan officers can also answer questions that most homeowners will have on their minds when applying for refinancing.

Homeowners must supply the required documentation when refinancing their loan, like financial information, W2’s and paycheck stubs. A credit check might also be implied on the individual who is applying for refinancing on their loan. Once the application process has been completed, the next step will deal with appraising the homeowner’s property. In order to accurately assess a new loan, the property that is being used for collateral must be assessed. Once the value of the property has been determined, information about the title will also be assessed. The title is looked over in order to make sure that there are no lien holders on the title, besides the original lender.

The next step that happens after the property has been valued and the title has been cleared will deal with the title company and mortgage company. The title and mortgage company will make all necessary preparations to the paper work that is needed to finalize the loan. The borrower signs the paper work, which is then sent to the title company. At the time that the title company receives the paperwork, they will then make preparations to meet with a closing agent.

A public notary is usually present to complete the necessary paperwork when meeting with a closing agent. This process is known as “closing”, which every refinancing process must go through in order to complete the transaction. The necessary paperwork is then sent to the title company in order to look over the documents for any errors or any changes that may need to be worked out. After all these steps have been accomplished, funding will take place within three days, unless the borrower decides to make any changes. On the fourth day, the borrower cannot make any other changes to the financed loan.

The fourth day deals with a check clearing the bank that is used to fund the loan. A bank wire is also typically used, but it is also not cleared until the fourth day to allow the rescission period to be in effect. What happens before a refinance loan is funded is a lot of typical paper work that is performed by the borrower, the title company, and the mortgage company. All parties must agree on all aspects of the loan and sign the required documentation in order for the process to be completed. Refinancing a mortgage is almost like getting a new mortgage, with only a few minor differences.