The Role of Title Companies in Refinancing

FLORIDA TITLE INSURANCE COMPANY

THE ROLE OF TITLE

COMPANIES IN REFINANCING

Banks loan money to finance real estate purchases, property improvements and home equity lines of credit. In exchange for loaning the money, the bank charges the property owner interest and requires that he sign a mortgage. If the owner fails to repay the loan, the bank can foreclose on the mortgage and acquire the property. At times, an owner might refinance his mortgage in order to obtain a lower interest rate or to borrow additional funds. A title company is o�en involved in the refinancing process.

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Jonathan Zachater

TITLE RESEARCH The bank hires a title company to research the title to the property. The lender wants assurance that the loan applicant is the legal owner of the property. The lender also wants to know whether there are any problems with the title. Even if the title was researched for the initial mortgage, the lender wants to know if any changes have occurred in the title since that time. For example, a search might reveal a judgment that was filed against the owner since the date of the original mortgage and the lender could require that the judgment be paid before refinancing.

Zack Timberleck

COMMUNICATION HUB The function of title companies in refinancing varies. In some companies, a closing agent might contact lenders to determine the amount of money required to pay off existing mortgages. The closer might also communicate with the property owner, attorneys, government officials, surveyors and creditors who are working to resolve title issues before the refinancing occurs. If the title company is hired to close the transaction, the closing agent gathers all of the documents required for the refinancing

Mary Steve

CLOSING A “closing” is the meeting in which the borrower signs the loan documents and arrangements are made to disburse money. The title company’s closing agent prepares a settlement statement that lists all of the bills that will be paid from the loan proceeds and the amount that will be disbursed to the borrower.

At the closing, the borrower signs the settlement statement and refinancing documents, including a new promissory note and mortgage. The closer delivers the mortgage to the county recorder’s office.

DISBURSING If the purpose of the refinancing is to provide additional funds to the borrower, the lender arranges to disburse the money. When a title company is hired to handle the closing, the lender might first deliver the funds to the title company. The title company then delivers money to the borrower and any other parties who are entitled to payment according to the settlement statement. After the closing, the title company might provide the lender with another title search, abstract or a final title insurance policy to verify the lender’s new mortgage lien on the property.