Once you decide on a lender, make sure you lock in the rate, implying the lender committing to that day’s interest rate, no matter if the rate shoots up in the days to come.
When you plan to refinance your existing mortgage, you are simply opting for a new mortgage replacing the current one. People opt for refinancing for numerous reasons, one of which is looking for a low rate of interest. Then, reduced interest is not the only thing you should focus on when refinancing. According to an article published on Forbes.com, the other factors you need to look for include the kind of loan, fees, the lender, etc. You should also work with a professional real estate lawyer while refinancing your mortgage.
Refinancing comes with many benefits such as a reduced loan term, doing away with mortgage insurance fees, and moving from an adjustable-rate mortgage to a fixed-rate one. Read on to learn more.
1. Legal issues while refinancing your mortgage
Though refinancing mortgage has benefits, it has some legal issues and so you need to determine whether the refinancing expenses outweigh the prospective savings. You need to look into these aspects:
Prepayment penalties: A few loans have penalties or charges if you manage to pay off the amount before a specific period, mostly 2-5 years, passing from the original date of the loan.
Buying money mortgage protections: In some places, a mortgage for buying a house comes with specific protections. When it comes to a foreclosure on a purchase money mortgage, the bank or lending institution cannot sue you if they lose the funds on a foreclosure. When you refinance, the new loan implies that you lose the purchase-protection money mortgage.
Payment of debts: Some people using refinancing to benefit on equity in their properties. They make use of the money to clear other debts such as credit cards. Then, a couple of these people quickly turns around and racks up more credit card loan. Though refinancing seems a great solution to resolve a few financial issues, it is imperative to reconsider the choice before making the final decision.
2. Mortgage lawsuit
Based on situations, party disputes may arise and lead to a legal suit depending on mortgage problems. Since there are numerous pieces of mortgage negotiations, you will find several instances of mortgage lawsuits. Let us explain this point with the help of an example. For instance, if you fail to make the monthly payments on your mortgage, the lender will file a legal suit leading to a foreclosure.
When it comes to unfair agreement terms, these could be disputed in a court of law, resulting in the re-writing mortgage terms to safeguard the rights of a borrower.
Based on some situations, there are disputes related to the management of an escrow account related to the mortgage or for that matter a loan alteration contract, where the lender may accede to change specific terms and conditions of the current mortgage. In certain situations, the court of law might provide monetary damages to the no-fault party.
3. You will need a lawyer to refinance your mortgage
When you are contemplating to refinance your mortgage, you might find it useful to discuss with a reliable and credible real estate lawyer. A local legal professional has the knowledge to elucidate the legal problems you face while refinancing your existing mortgage and help you with things like agreement terms as well as negotiation. In some instances, your lawyer may also serve as a closing agent, and put in plain words the documentation associated with the particular refinance deal. If you have any queries related to the paperwork, do not hesitate to consult with Martin G. Schulz – Edmonton Real Estate Lawyers or similar ones.
If you face any legal issues related to the mortgage and require filing a case in a court of law, a certified and experienced real estate attorney will help you to figure out what rights you can exercise against the bank or lender. The lawyer will also represent your case in a court of law and assist you so that you get the best result out of your case.
4. The refinancing process
There are many steps when it comes to refinancing a mortgage. The initial step is the assessment of your existing home mortgage. Make sure you check to determine if there is any prepayment fee or charge and determine what your existing rate of interest is. These are essential facts to learn before you start looking around for a new mortgage loan. Take the assistance of a legal professional if you feel some issues might be present. Most important is considering your budget and figure out what amount you can pay when it comes to monthly mortgage payments. Do not overdo it because you should not opt for a loan that you cannot repay on time.
When you are sure of the particulars of an existing mortgage, it is essential to see what are the pros and cons. You need to bear in mind the following aspects.
- The kind of refinancing choice, like the rate-and-term and cash-out
- The duration of your new loan
- The existing rate that you are paying
- The kind of mortgage, whether payable easily or too expensive
- What are the closing expenses
It is important to consider the above aspects before you take the plunge.
While opting for refinancing your mortgage, you must work with a real estate lawyer to guide you through the entire process. The legal expert can advise you and point out the best alternatives you have and help you stay away from scammers and fraudsters in the mortgage lending industry. You will find unscrupulous lenders who would persuade you to refinance at a minimized rate of interest. Then, these scammers will not elucidate the hidden fees or charges associated with the mortgage, normally demanding an upfront fee.
Once you decide on a lender, make sure you lock in the rate, implying the lender committing to that day’s interest rate, no matter if the rate shoots up in the days to come. Besides, you will have loads of paperwork that your lawyer will take care and therefore, you can relax. Do your research too before refinancing your mortgage and always work with an experienced real estate lawyer.