With interest rates at historic lows, homeowners have been refinancing at a record pace in 2020. In fact, so many people have opted to refinance and stay in their existing homes that it has really limited the inventory in our resale market!
Here are a few things you should review if you recently refinanced.
1. Did your previous loan get paid off?
When you refinance, you pay off one loan and take on another — often with a different financial institution. Make sure that you received a letter from your initial lender verifying that your loan was satisfied and double check your previous mortgage account online to verify.
2. Did you get the money back you were due?
When you refinance, your new lender will require that you re-establish and fund a new impound account for your taxes and insurance. However, often there is still money sitting in your old impound account and, depending on when your next tax bill is due, this amount can be significant. Make sure that you received the balance of the monies you are owed from your previous loan. You should receive a check from your original lender within two to three weeks of your refinance.
3. Did your taxes get paid?
When you refinance and pay off one loan and set up another, any taxes due will need to be paid. We had an incident where a client used an online title company for their refinance, received money back they weren’t expecting, and later discovered that their taxes had not been paid. You can check www.mcassessor.maricopa.gov to see if your taxes have been paid by entering your address into the search bar. Once you find your property, click View/Pay Tax Bill.
4. Did you tell your accountant?
Be sure to send the final settlement statement from your refinance to your accountant, especially if you did a cash out refinance or paid points on the refinance. The Tax Cuts and Jobs Act of 2017 altered many of the deductions that were previously available, so it is best to send the statement to your accountant for review.
5. Did you put your home back into your trust?
This is a big one! We work regularly with estate attorney Jacqueline Hough at Hough Law Offices, and she recently shared with us that many people are taking their properties out of their trust to refinance.
“As a general rule, most lenders who require the residence to be deeded out of a revocable trust offer to deed the residence back into the trust once the refinancing is complete,” Jacqueline advised. “However, we are seeing too many cases with lenders who, for one reason or another, do not actually follow through with the second deed transferring the residence back into the trust, or lenders that do not even offer this as part of the refinance process.”
This is an important detail, because if a homeowner passes away, the property that is outside the trust may have to go through the probate process. The probate process is more costly, takes additional time, will slow down the process of selling the property, and can cause added stress on the beneficiaries. You can go to www.recorder.maricopa.gov to check your deed or give us a call and we can look it up for you.
If you are thinking of refinancing, just remember to watch your fees (in addition to rates), use a reputable lender and title company, and really evaluate if it makes financial sense to reset your loan. As always, don’t hesitate to call us with any questions.
John and Natascha Karadsheh are co-owners of KOR Properties, a boutique real estate brokerage serving the Valley of the Sun, and the creators and founding sponsors of Mesa Food Truck Fridays.
John has been a Multi-Million Dollar producing agent for over 17 years and is an Accredited Buyers Representative (ABR) and Certified Residential Specialist (CRS), and is the Chairman on the Arizona Regional MLS Rules & Policies Committee.
Natascha is an Associate Broker of KOR Properties, a Multi-Million Dollar Producer, Past-Chair of the City of Mesa Economic Development Advisory Board and the founder of the Falcon Business Alliance.
You can reach John at (602) 615-0843 and Natascha at (602) 909-4995, or visit their website: KORProperties.com.