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What You Should Know About Refinancing In New Jersey

Refinancing your home can offer you new opportunities in life, but a lack of information may stand in the way of achieving your goals. Instead of letting questions stop you from refinancing your home, get the guidance you need from a New Jersey real estate attorney who helps private clients and real estate professionals alike.

“Refinancing” is a term often used with residential real estate. As an established real estate firm in New Jersey, our team at Mariano & Coiro, P.C., is here to answer your questions, such as:

What is refinancing?

If you own a home, you can replace your existing loan with a new, lower-rate loan. This can lower your mortgage payments or help you obtain equity in cash. Some homeowners refinance to shorten the term of their mortgage (e.g. from a 30-year term to 15 years).

The principal aim of most refinances is to obtain a mortgage with a lower interest rate which will lower your monthly payments. Lastly, some people refinance to extract available equity from their home for specific purposes (e.g., home improvement, college tuition or debt consolidation).

If you are interested in refinancing, your lender probably offers home equity loans or second mortgages. Before you choose to refinance, you should discuss your options with your attorney to avoid potential liens or other issues.

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Should I let my lender refinance my home through their title company instead of working with my attorney?

Often, lenders try to persuade borrowers that they can obtain lower closing costs by working with an affiliated title company or another entity. But these companies typically offer lower closing costs by charging higher fees and adding on incidental charges to your total. Your lender cannot force you to use their title company. Instead, you should always have an independent attorney to look out for your best interests, especially against the powerful counsel of large lending companies. It is prudent to have your own attorney conduct the refinance closing to explain all documents you will be signing and otherwise protect your interests.

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Will I have to buy title or homeowner’s insurance a second time?

Yes, since each title insurance policy is specific to a certain mortgage. If you take out a refinance or second mortgage, you will need to purchase title insurance specific to it.

For homeowner’s insurance, you will need to inform your insurer of your refinancing. Then, you can add your new lender’s name and mailing address to your homeowner’s policy and obtain proof of insurance.

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Should I get another survey?

In most instances, you can use the survey that you requested when you purchased the property as long as you can provide the original survey (with a seal) from the surveyor. However, if you made any major improvements such as a deck or garage to your home, it may be necessary to get a second survey. If you have not made any major improvements, then you can usually sign an affidavit of no change and use your existing survey.

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Will I have another closing day for my refinance?

Yes, refinances require you to execute the new documents for your loan. The process is quite similar to the closing on your initial purchase. In New Jersey, there is a period in which you can cancel the refinance up to three days after your closing day. Hence you can even choose not to proceed with your refinance after your closing. However, once the three day period expires, the loan is final and all funds will be disbursed.

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How will I know my closing costs and what to bring to the closing?

Within 10 days of your application for refinancing, your lender must provide a good-faith estimate of your closing costs. This figure may not be completely accurate, but it will give you a general idea of the amount of money you will need on your closing day (i.e., your closing costs). Your lender can give you the exact figure within 24 hours of your closing. You will receive a document called a CD or HUD-1 statement that you can review with your lawyer prior to or at closing.

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Should I hire an attorney to refinance my home?

It is very important to note that neither mortgage lenders nor settlement/title agencies can represent a borrower’s legal interests. Only an attorney can ensure that legal documents and the refinance process are conducted in accordance with the laws. Lenders often persuade borrowers to avoid using an attorney with the promise of lowering closing costs by working with an affiliated title company or another entity. But these companies typically offer lower closing costs by charging higher fees and adding on incidental charges.

The good news is your lender cannot force you to use their title company. While it is not required to use an attorney, it is important to do so in order to protect your interests. Hiring your own attorney insures that everything is done properly and to your benefit.

Mariano & Coiro, P.C., has the experience needed to ensure your transaction runs smoothly and provides you peace of mind by reviewing your documents and simplifying the process. Contact our office in Somerset at 732-860-7620 or email us here to schedule your initial consultation with us today.