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Last Updated: Jul 2nd, 2008 - 21:15:22 |
(NC)-If you are a homeowner with a mortgage, it is likely that at some point you will need to refinance. Refinancing a property means arranging a new mortgage to replace the existing one. Often people refinance to acquire more funds to renovate, or the term of their existing mortgage could be coming to an end and they want to shop around for options other than a straight renewal with their existing lender.
"A mortgage is a large financial commitment and getting professional advice when you are refinancing can be invaluable to protecting your interests and saving money," says Kathleen Waters, a specialist in real estate law and vice-president of TitlePLUS title insurance. "Having a lawyer involved helps borrowers understand the transaction and know their legal options."
The biggest way a lawyer can help is by explaining the mortgage document. Often people don't want to read loan documents thoroughly and may even have difficulty understanding all of the clauses and the consequences. A lawyer will review the papers and explain them to you to ensure you are getting the loan you expected; clarification of all the important clauses should mean no surprises later on.
For example, a borrower may not be aware of how the debt under a variable rate mortgage can continue to grow, notwithstanding the borrower making regular monthly payments. The problem arises when the interest rate is going up but the monthly payment stays the same for a fixed period.
A lawyer would explain the fine print, so that the borrower fully understands the term, the interest rate and the payments. The lawyer can also explain the terms which benefit the lender, including what the lender can do if you do not make your mortgage payments on time.
In the process of acting on the refinance, the lawyer will determine what is currently on title to your home and can arrange for title insurance to protect you in case of fraud, if you have not purchased it previously.
If you choose to take out a line of credit, a lawyer can explain how this impacts your legal interest in your home and ensure you understand what debt the loan actually secures. Some borrowers who have credit card accounts with the same lender are surprised to learn that their line of credit mortgage also protects the lender for balances on the credit cards.
A useful resource for people looking to refinance is the TitlePLUS Real Simple Real Estate Guide, available for free at www.lawpro.ca. The guide provides important information on the role of a real estate lawyer as well as specifics about refinancing a mortgage. The guide also offers useful calculators, a glossary of terms and a locate-a-lawyer tool.
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