Whether you are buying or refinancing a home, there is still a closing involved. How do these processes differ and is one any easier than the other? Therein lies the question. While each transaction will include similar components like paperwork, escrow, closing costs, and timing elements – let’s explore what makes closings for home purchases versus refinances unique.
When comparing the two in this instance, there isn’t really any significant difference. Both types of closings will require the same volume of paperwork to sign – as the majority of the documentation is related to the mortgage company. The only difference is in the ease of completion. Which leads to the next topic, timing…
Here is where things become easier with a refinance. When you refinance, there are less parties involved in the transaction – as there is no one on the selling side. When you eliminate that component to the process, it’s much easier to coordinate the timing since you are working directly with the mortgage company and not waiting on the other party. This helps streamline the process and allows it to go much faster, as there are fewer players involved and the existing players are already familiar with each other.
For both types of closing transactions, your mortgage company will establish an escrow account where the money for home insurance and taxes will be held. Since you are refinancing to a new mortgage, a new account will need to be established. If you have money left your old escrow account, it will be refunded to you. Just be sure to allow 30 days to receive the refund. Follow up with the old mortgage company if you do not receive it within that time
What about closing costs? Whether you are purchasing or refinancing, there are closing costs involved. Remember, a refinance is a new loan and some closing fees will still apply – but these amounts can vary depending on your lender, mortgage program, and existing equity. In some cases, closing costs are less on a refinance than a purchase.
Summary of Closings for Home Purchases versus Refinances
As you can see, there are definitely some differences regarding closings for home purchases versus refinances. Although there are some similarities with paperwork and fees, a refinance is a bit easier and less time consuming than a purchase. If you have any questions regarding your home purchase or refinance closing, please feel free to contact us.