After Closing (Post-Closing Process in Refinancing)

Once you’ve signed all the final documents at the closing of your refinance loan, the transaction isn’t entirely finished. The “After Closing” phase involves several important steps and responsibilities, both for you as the borrower and for the lender, title company, and potentially your previous loan servicer.

1. Rescission Period (for Primary Residences Only)

• What it is: If you are refinancing your primary residence, you typically get a three-business-day rescission period. This means you have three days to cancel the refinance loan if you change your mind.

• During this time: The lender does not fund the loan. You can cancel by providing a written notice to the lender.

• After it ends: Once the rescission period ends without cancellation, the loan officially funds—money changes hands.

2. Loan Funding and Disbursement

• Paying off your old mortgage: Your new lender sends the necessary funds to your previous mortgage lender to pay off the old loan. This is the main purpose of most refinances.

• Disbursement of cash (if cash-out refinance): If you’re doing a cash-out refinance, any remaining funds owed to you (after paying off the old loan and fees) are disbursed—usually via check or direct deposit.

• Payoff confirmation: Your old lender will issue a payoff statement and eventually a confirmation of loan closure.

3. Title and Mortgage Recording

• County recording: The title or escrow company files the new mortgage (deed of trust) with your county recorder’s office, officially making the new lender the lienholder on your home.

• This process ensures that public records reflect the new financing and that the old lien is released.

4. First Mortgage Payment Setup

• Payment schedule: You will receive documentation from your new lender outlining your first mortgage payment due date, typically about 30 to 45 days after funding.

• New loan servicing setup: If your new lender services its own loans, you’ll deal with them directly. Otherwise, they may sell or transfer servicing to another company, and you’ll receive notice if that happens.

5. Escrow Account Transfer (if applicable)

• If your previous loan had an escrow account (for taxes and insurance), your old lender may refund any remaining escrow balance to you, usually within 2–4 weeks.

• Your new lender may establish a new escrow account, funded from your closing costs or rolled into the new loan, depending on the structure.

6. Credit Reporting

• Your old mortgage account will show as “paid off” or “closed” on your credit report.

• The new mortgage will appear as a new account, which may cause a temporary fluctuation in your credit score due to the inquiry and new debt structure.

7. Document Retention and Review

• You’ll receive or already have received a final Closing Disclosure (CD). Compare this to your Loan Estimate to make sure everything matches up.

• Keep all signed documents, including the note, mortgage, CD, and escrow instructions. These will be important for taxes and record-keeping.