Just because you’re refinancing a home doesn’t mean you can forget about a title insurance company. A title company is still needed to make the process efficient and ensure there are no issues with refinancing.
Otherwise, without a clean title, the property might not be free and clear. Resulting in more paperwork, added costs, and a huge headache down the line.
Given how important it is to use a title company for refinancing, we’ve outlined the things you should know below.
1. To Confirm Title Ownership
The most obvious reason why you still need to use a title company is to confirm ownership of the property. Even if a search was done for the initial purchase, a second search will be needed for the lender’s approval.
A title company will be able to do this by searching public records on your behalf. After all, confirming ownership is not something to do on your own. That’s because title companies have industry experience and access to critical documents. Without their help, reviewing things like public records can be difficult, if not impossible.
2. To Get the Lender’s Approval
Even if you are refinancing a property, the lender wants assurance that the loan applicant is the legal owner of it. A title company helps by providing this information to the lender and doing all the research for them.
During the research phase, a title company will look to uncover information that lenders find valuable. This is true even if it was the same lender that was originally used for the sale of the property. What they are looking for is if something changed during that initial purchase.
For example, the title company might uncover that the owner has had a judgment filed against them. This information is critical to lenders who could require owners to pay the judgment before they can begin the refinancing process.
3. To Prepare A Settlement Statement
A title company won’t just help with research but can also help with the closing process. They usually help out during closing by preparing the settlement statement for the lender. This statement is only issued once the lender has reached an agreement with the property owner and is ready to issue the loan.
The document explains (in great detail) how the funds will be issued to the borrower and how they will be used. This document is also critical to the ‘closing’ of it. Without it, the new promissory note and mortgage won’t be issued. Nor will the new mortgage be delivered to the county recorder’s office.
4. To Disburse Funds
There are some instances that a title company will be involved in the disbursement of funds. This will usually only happen when the settlement statement includes more parties than the borrower who are entitled to a payment.
In this situation, the agreed-upon loan amount will be issued directly to the title company (instead of the borrower) and given direction on how to distribute it. This disbursement is usually directly to the borrower and any other parties who are entitled to payment according to the settlement statement.
After the closing, the title company might need to provide the lender with another title search, abstract, or a final insurance policy to verify the new mortgage.
5. To Act As a Liaison
Communication between all the parties involved in refinancing can quickly get confusing without the help of a title company. This can result in missed messages, overlooked documents, and wasted time if someone is not there to ensure the process is running smoothly. For this reason, a title company can help out.
Title companies are great resources to have as they act as a liaison between all the parties involved; the borrowers, lenders, attorneys, government employees, surveyors, and more. A title company also makes sure that all of these various organizations are in communication with one another. Resulting in a more efficient process for all involved.
Ultimately, we understand that refinancing a home can seem like an overwhelming and long process. But, with our help, New Door Property Transfer can make it easier. If hired, our closing agents will make sure all the right documents are gathered, delivered, and prepared. We’re ready with years of industry experience to step in and ensure your refinancing process is a success.
For more information on how we can help you through the refinancing process, call us at 610-549-4129 or email us anytime at info@newdoorpt.com today.