What to Expect at Closing – Refinance
Refinancing your mortgage involves closing costs and legal steps similar to purchasing a new property. Here’s what to expect when meeting with your lawyer to finalize your mortgage refinance.
1. Interest Adjustment Date (IAD)
- The date from which interest on your refinanced mortgage is calculated.
- If your closing date and IAD are not the same, you will owe interest for the period between them.
- Example: If your closing date is the 27th but you set your IAD as the 1st of the next month, you must pay interest for the interim days.
- This interest can either be deducted from the mortgage advance or directly from your bank account.
2. Title Insurance
- May be required by the lender or chosen instead of a new Real Property Report.
- Protects against title defects and legal claims on the property.
- Your lawyer will advise if it’s necessary for your refinance.
3. Fire Insurance
- Required to protect the property and the lender's investment.
- If refinancing a condo, confirm if fire insurance is included in your condo fees.
- Provide your lawyer with proof of fire insurance before closing.
4. Legal Fees
- These are the costs associated with your lawyer’s services for handling the refinance process.
- Confirm if the quoted fee includes disbursements (e.g., registration fees).
5. Appraisal (If Required)
- Typically required if the property’s value needs to be assessed for the new loan amount.
- Confirm with your mortgage agent if an appraisal is necessary and its estimated cost.
6. Bridge Financing (If Required)
- If using funds from the sale of another property to refinance, and the sale closes after the refinance, you may need bridge financing.
- This is a short-term loan to cover the gap, which is paid off once the other property’s sale is completed.
- Not all lenders offer bridge financing—confirm with your mortgage broker in advance.
Final Tips
- Meet your lawyer about two weeks before closing to review and sign all documents.
- Bring all necessary documentation, including fire insurance proof, ID, and payment method for legal fees.
- Clarify all costs with your lawyer to avoid surprises at closing.
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