With any refinance, there is a loan payoff from your previously held mortgage generated for the closing. This is so the new lender and title company know how much to pay to your current lender in order to satisfy the debt, which allows the current mortgage on the house to be released. When you pay your mortgage regularly, you are always paying interest in arrears (unlike rent where you pay for the month to come). This means that your mortgage interest is always only paid up through the first day of the month for which you are making the payment. In other words, when you make your mortgage payment due on October 1st, your mortgage is only paid up through the first day of October since that payment covered all the interest that accrued during the month of September. This number is the balance reflected on your statement. Therefore, if you close on a refinance in the middle of October and your old mortgage company is paid off October 20th, then they will require 20 days of accrued interest as part of the payoff. The current balance plus the accrued interest (plus any processing fees from your current lender) will give you your total payoff, which is always higher than your current balance.
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Related FAQs
How Do Seller Concessions Affect the Appraisal?
Seller concessions will not affect an appraised value, however they can affect the purchase price of the home if the amount of the concessions exceeds the closing costs of the buyer. Since the lender will calculate their loan to value off the lower of the appraised value or the purchase price, it can have an impact on the loan if
What Can’t Seller Concessions Be Used For?
Seller concessions cannot be used for any other purpose than reducing the closing costs of the buyer. As such, they cannot be applied to down payments, home furnishings, or used as a way to receive a concession for a cure to an inspection issue. If the concessions exceed the amount of the closing costs, the lender will start deducting the
What Are Seller Concessions Used For?
Seller concessions can be applied to certain costs and fees, including property taxes, appraisals, title insurance, attorneys and more. Visit our “Understanding Seller Concessions” page for more in-depth information on seller concessions.
What is the average PMI rate?
As of 2022, the PMI rate varies between 0.55% and 2.25% of the original loan amount. PMI rates will vary depending on the type of loan, down payment and credit score. For more information on PMI click here.
What is a “cash-out refinance?”
A cash-out refinance is a mortgage-refinancing option in which an old mortgage is replaced by a new one with a larger amount than owed on the previously existing loan, therefore providing them with the difference in cash at closing. In this way, it allows borrowers to tap into their home equity for things like home improvements and debt consolidation.
What are seller concessions?
Seller concessions are an agreement, written into the purchase contract of a Real Estate transaction, which state that the seller will contribute a certain amount toward closing costs normally paid for by the buyer. Visit our “Understanding Seller Concessions” page for more in-depth information on seller concessions.
When do I know exactly what my overall costs are and how much I will need to bring to closing?
Since there are many facets to closing on a mortgage and many entities that contribute, such as title, settlement, escrows, etc. it takes time to gather all the information, and consequently the costs, that would be related to your particular home in your particular township for a closing. Because of this, your New Jersey Mortgage lender will provide you at
With a New Jersey cash out refinance, do I receive my money at the closing?
With any NJ Cash-Out Refinance (or any refinance for that matter) on a primary residence, the loan is funded 3 days (not counting Sunday) after the loan closes. This is to allow for a three-day “Right of Rescission” period that is required by New Jersey state law. This affords the consumer the opportunity to rescind their transaction even after the
How do I know if my mortgage will be sold after closing?
Bear in mind that there are 2 parts to every mortgage that can be sold post-closing. They are the securitized note and the servicing. While a large portion of the securitized notes in the country will be sold off to Fannie Mae and Freddie Mac, that sale will generally be transparent to the consumer. What is usually implied by the
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