Refinancing a New Jersey Home

WHAT IS A REFINANCE?

Owners of existing homes will often seek new financing, replacing their existing loan with a new loan at a lower interest rate and lower monthly payment, or to obtain cash equity out of their home for home improvement projects or a variety of other reasons. A refinance will replace your existing first mortgage. Many lenders offer second mortgages or home equity loans that generally complement a first mortgage. We strongly recommend that you have an attorney review any transaction that will result in a lien being placed on your home.

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MY LENDER SAYS THAT THEY CAN COMPLETE THE REFINANCE THROUGH THEIR TITLE COMPANY WITHOUT COSTS OR ATTORNEY FEES?

Lenders often attempt to circumvent attorney participation, by steering you to their own title companies, or other settlement services with which they are affiliated. Under the guise of lower closing costs, these title companies often charge HIGHER costs including a state mandated "settlement fee" of $350, which is often not disclosed. Other incidental charges that are not charged by attorneys can bring your closing costs higher than if your attorney had been involved from the start. The only way you can be assured your rights and interests are protected at all times is if you have your own independent counsel act on your behalf. Lenders cannot force you to use their title company and must at all times provide you access to your own legal counsel, if that is what you wish.

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WHY DO I NEED TO PURCHASE TITLE INSURANCE AGAIN?

Title insurance is specific to the mortgage which it insures. As a result, your lender will require you to purchase title insurance to insure your new refinance loan.

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WHAT ABOUT MY HOMEOWNERS INSURANCE WHEN REFINANCING?

When you intend to refinance your home, you will need to obtain the "loss payee language" from your new lender, which is their official name and mailing address. You should request that your insurance company add the new lender to your policy and obtain a new declaration page and paid receipt for closing.

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DO I NEED A SURVEY?

Unlike the requirement to have your title insurance re-issued, you may use your existing survey in most cases provided you have an original survey with a surveyor's seal. The use of the existing survey is permitted, provided no additional improvements have been placed on the property, and you agree to sign an affidavit of no change at closing. In the event, you have built a deck, swimming pool, garage or other permanent improvements on the property, you may need to obtain a new survey.

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AM I REQUIRED TO OBTAIN A CERTIFICATE OF OCCUPANCY OR SMOKE DETECTOR CERTIFICATION?

NO, only when the property is being sold or rented are these certificates required.

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HOW WILL MY EXISTING MORTGAGE BE PAID OFF?

Any existing mortgage will be paid off at the time of your refinance, by our office.

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IS THERE AN ACTUAL CLOSING FOR A REFINANCE?

YES, you will be required to come to our offices to execute your new loan documents on the day of you refinance. New Jersey requires a three-day right of recission that allows you to cancel the transaction anytime during the first three business days after your closing date. All funds will be disbursed after the expiration of the three-day recission period.

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HOW WILL I KNOW WHAT MY CLOSING COSTS ARE AND WILL NEED TO BRING FUNDS TO CLOSING?

Your lender is required by law to provide you a "good faith estimate of closing costs" within 10 days of your mortgage application. This will provide a detailed estimate of closing costs associated with your mortgage and closing. The lender will provide actual figures approximately 24 hours prior to closing. All figures will be specifically listed and set forth on a settlement form called a HUD-1 or RESPA settlement statement, and will be carefully reviewed with you at the time of closing. If it is necessary for you to bring monies to your refinance closing, our office will instruct you of the precise amount once your lender informs us of the final closing figures.

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