The Refinance Home Mortgage Closing Process Clarified

Whether you're refinaincing for lower payments or wish to borrow against the equity of your home, you have no obligations to pay your loan until it's been funded. This can give you the time you need to ensure that refinancing is the right decision for your family. And understanding the closing process is a big part of that.

Before You Close

Before the closing process begins, there will be things that must be done first off, such as signing and returning documents, sending them to prove your assets and income, receiving preliminary loan approval, and completing a home appraisal. Once the above are completed, closing can begin.

Final Approval

The closing process can formally begin once the underwriter has approved your application. This is called the clear to close. Once the green light has been given by the underwriter, there must be a meeting between you and the closing agent, something that the mortgage processor will take care of.

Once the details of the meeting are arranged, the required documents will be prepared by your lender. Along with the documents will be how to manage aspects of the process, such as who signs which documents, what else you need to bring to the meeting and other such items.

The Closing Meeting

At your closing meeting, you will be presented with the Settlement Statement, which will detail the fees you need to pay. However, you are within your rights to request a copy of this and others such as the Deed of Trust and the Truth in Lending Statement. Careful review of these documents prior to the meeting is higurged, as any incorrect information can result in a delay in the process or unpleasant surprises following signing.

Grace Period

As the borrower, you do have a grace period of about 3 days once you sign to walk away from the refinance. This is known as the 'rescinding period', and allows the loan to be cancelled with either a letter stating that you've decided to cancel, or by signing the Right to Rescind document that you should have received at the closing. Should you decide to go this route, no further action is necessary. But if you're going for a refinance, then your funds will be released to you. The timing for the rescinding period, which is 3 days, does include Saturdays, but does not include Sundays or bank holidays.

Delays And Signing Time

Tuesdays and Wednesdays may be the best time of the week to sign your closing documents, simply because they allow for a two-day cushion in case of any unexpected delays.

Your lender does have the right to delay the funding of your loan if they see anything that doesn't seem right. There is no law which states that a lender has to fund by a certain date; only that they can't fund your loan until a certain date.

Although closing can take a long time, it can be worth it if you are able to get a better rate that takes the strain off of your monthly cash flow. And if in doubt, contact your broker or other knowledgeable individual if anything isn't clear.

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