With record low interest rates, more homeowners are refinancing their mortgage. One question we get very often is what the closing costs are for refinancing a mortgage.
Before we break it down further, you may be caught by surprise that you even need to “close” your mortgage refinance. You likely remember having to close your home purchase, but refinancing your mortgage? The short answer is, you have to close your mortgage refinances as well. Here's why.
Refinancing a mortgage means paying off an existing loan (mortgage) and replacing it with a new one. In most scenarios, your new lender may be a different institution than the one that holds your current mortgage and part of the amount you borrow may be used to pay off your existing loan to your current lender.
When you refinance your mortgage, your new lender approves your mortgage application and issues a mortgage commitment. At that point, the closing process kicks off and includes formalizing your new mortgage, while paying off your old mortgage from the proceeds of the refinance.
The mortgage refinancing closing process resembles some steps you may remember from purchasing your home.
Namely the title for the property is searched to verify your ownership, you will sign documents for your new mortgage, writs or court orders against the homeowners are searched, your current mortgage gets paid off and discharged and your new mortgage gets registered on title. Your lender may require a title insurance policy as well. When all these steps are done, the remaining funds are distributed as applicable.
At Deeded, we can help you close your mortgage refinance seamlessly from the comfort of your home. Get started by getting a free quote.
Completing these tasks is usually done by a lawyer, notary, or title company and the closing costs for refinancing your mortgage, in most cases, is paid for by the homeowner (or borrower).
The closing costs for refinancing your mortgage can vary from province to province and can depend on factors such as the number of mortgages on the property, lender conditions, government fees, registration costs and others. Depending on the circumstances, a mortgage refinance may also require Independent Legal Advice (or ILA for short), for one or more of the borrowing parties.1