What Happens Before a Refinance Loan Is Funded?
Refinance loans appeal to many consumers who want to obtain better terms for their mortgage loans. Refinancing provides customers with the option of lower interest rates and payments, the opportunity to pay off other loans, and even cash back. Once approved for the loan, a chain of events must occur before the loan can be funded.
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Application
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Consulting with a loan officer at the bank or mortgage company is the first step in the refinance process. The loan officer can explain different refinance options and answer any questions. When you're ready to apply for the loan, the loan officer will assist you in filling out the necessary forms. Other necessary paperwork such as W2s and pay stubs may be required at this time.
Appraisal and Title Search
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After the application is complete, an appraisal of the home and property you'd like to refinance will need to be conducted. A title company usually hires the appraiser and reports the information; the title company will also hire an abstractor to conduct a title search to ensure there are no liens on the property.
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Coordinating the Closing
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The next step for refinance occurs between the mortgage company and the title company. The mortgage company prepares the necessary paperwork for you to sign and sends them to the title company. The title company then schedules a date and time for you to meet with a closing agent, usually a notary public or attorney, to complete the paperwork. This is known as the "closing."
Post-Closing
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After the paperwork is complete, the closing agent sends the documents to the title company. The documents are reviewed for errors and copied for your file. This process should take no more than one business day.
Funding
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From the date of the closing, you have three days to rescind the loan; this time period is called the right of rescission period. On the fourth day, the loan is funded via check or wire to the appropriate recipients.
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