3 Differences Between Escrow Services on a Home Loan Refinance Vs. a New Home Purchase

3 Differences Between Escrow Services on a Home Loan Refinance Vs. a New Home Purchase

3-differences-between-escrow-services-on-a-home-loan-refinance-vs-a-new-home-purchaseThere are some notable differences between refinance and purchase loans, so it’s little surprise that escrow services also differ between each type of loan. As the name suggests a new home purchase loan is a mortgage for financing the purchase of a new home, whereas a home loan refinance is used to refinance your current mortgage, so it is understandable that the aspects of escrow are different for each.

Let’s take a closer look at 3 differences:

1. No Closing Fees for Refinancing

Perhaps the most recognizable difference between escrow services on a refinance loan compared to a purchase loan is the closing fees for each loan.

In most cases, a refinance loan involves fewer fees for closing loans and any settle charges. Rather than having to pay this directly, the fees are included as an overall amount of their loan. New home purchases require you to pay fees that are not included as part of the mortgage to bring closing of escrow, and the funds usually need to be sourced for a minimum of 60 days in most cases.

2. More Parties Involved in a New Home Purchase

Expect the escrow process to be much quicker and smoother with a refinance loan, as there are fewer people involved in this process. Most of refinancing is dictated by mortgage companies, while a new home purchase loan is mostly controlled by the seller and their real estate agent.

As there are no sellers involved in refinancing, the entire process takes a more streamlined approach, with escrow likely being much shorter and efficient when compared to the process and closing of escrow for a purchase loan.

3. Required Documents

Escrow companies always require more documentation for a new purchase when compared to refinancing, and you can expect to receive more documents on your end too.

For instance, escrow agents require a copy of the purchase offer contract and a copy of the check for the earnest money deposit, while they will also need a range of other documents.

The escrow company also provides more documents with a new home purchase loan, such as the title report, hazard reports, HOA documents (if necessary), and any seller disclosure documents. Also, any new home purchase loan will require new homeowners insurance too.

For refinancing, most of the documents needed you should already have, such as your mortgage payment receipts and a copy of your homeowners insurance declaration.

Inland Empire Escrow  provides escrow services for a diverse variety of real estate transactions.  With offices in Chino CA and San Bernardino CA, we quickly and professionally service all the surrounding cities such as Chino Hills, Ontario, Rancho Cucamonga, Upland, Riverside, Redlands, Colton, Grand Terrace, Yucaipa, and more.  To hear more about our escrow services for residential, mobile home, short sale, REO, bulk/business sale, 1031 Exchange, or agricultural escrow, contact us today at (800) 917-9387.