With a fixed rate, your principal and interest will never change. The amount paid into escrow will likely change annually.
This because your property taxes are assessed annually and are subject to change, often going up. Additionally, your insurance carrier will review your homeowners insurance policy annually and may adjust the premium.
SELFi will contact you to schedule your closing at a place and time convenient for you. Often the notary can meet you anytime between 9am and 8pm.
- Final Application
- Closing Disclosure
- Note – this is the promissory note
- Mortgage or Deed of Trust
- Right of Rescission
After you sign, and just before funding, the lender will check with your employer to make sure you still work there.
Funding and Recording
Funding is when the lender wires the funds to escrow. Escrow will then disburse the funds exactly as it has been detailed on the Closing Disclosure.
Recording takes place at the county where your home is located. The vesting deed are recorded and become public record.
After your refinance is completed – skipping payments
After your loan is funded, the title company will record your mortgage with the county and your refinance is officially completed.
This is often a source of great confusion among borrowers. Here is the truth: You can go two months without a mortgage payment, but there are no payments actually being skipped.
- Mortgage interest is paid in arrearsWhen you make a mortgage payment, you are actually paying the interest that accrued during the previous month. For payday loans in New Mexico example, when you pay your mortgage in June, you are actually paying the interest that accrued in May. This is the opposite of paying rent, which is paid in advance.
- Your payoff demand contains unpaid interestAs part of the refinance, a payoff demand is generated from your existing lender. Your payoff demand is the total amount needed to pay your existing mortgage in full. It is common for borrowers to confuse their current unpaid principal balance with their payoff demand. The payoff demand is the total of your unpaid principal balance + unpaid interest. Everyday you have a mortgage, interest accrues. So if you close on the 15th of the month, you will have 15 days of unpaid interest on your payoff demand.
- You prepay interest at closing until the end of the monthWhen you refinance, you prepay interest until the end of the month. For example, if you closed your refinance on the 10th of the month, you would prepay 20 days of interest.
- You always go one month without a mortgage paymentSince you prepay interest at closing, and since your mortgage payment is paid in arrears, your first payment is not due until one month after closing.For example, if your loan funds on September 25th, you would prepay 5 days of interest for the days of September 26th – 30th. Then your first payment on the new loan will not be due until November 1st.So while no interest is skipped, you effectively went the month of October without a mortgage payment.
- Going TWO months without a payment If your mortgage is paid in full during the month which your payment is due, you do not have to make that mortgage payment.For example, if you have yet to make your September mortgage payment, and your refinance closes on September 12th. You do not have to make the September mortgage payment and your first payment on the new loan is not due until November 1st. So you effectively went September and October without a mortgage payment.Keep in mind, by not making your payment in September, that means the unpaid interest will be added on your payoff demand. So while you can go two months without a payment, you are not “skipping” any interest.If you choose to go for two months without a payment, here are a couple things to remember: