Refinance title and closings in Florida

What does a refinance closing involve?

A refinance replaces one loan with another, so the title work is for the new lender. We search the title to see what the new mortgage will sit behind, order the payoff of the existing loan, close the new loan, pay the old one off from it, record the new mortgage and issue the lender's title policy.

The owner's policy from when the property was bought stays in force for as long as the borrower owns it, so a refinance does not buy a new one.

What does the lender's policy cost?

The premium comes off the schedule the state adopts by rule (Fla. Admin. Code R. 69O-186.003), on the amount of the new loan:

Many refinances qualify for the lower reissue rate. It applies where the first of these holds, and one of the other two:

• The owner’s or the seller’s own title was insured, and both we and the underwriter keep a copy of that policy.
• The new policy is dated less than three years after the policy that insured the owner or seller — this is the common one.
• Or it is a mortgage policy on a refinance of property insured by an owner’s policy that insured this same borrower.

The third is the one that usually decides a refinance: the borrower's own title was insured when they bought, and we can get a copy of that owner's policy. On a $400,000 loan the reissue rate is $1,230 against $2,075 at the original rate. Where the new loan is larger than the old policy's amount, the part above it is at the original rate. Send us the owner's policy if you have it; if not, we ask whoever closed the purchase.

What taxes are due on the new loan?

Two, both on the loan rather than the property:

• Documentary stamp tax on the mortgage, 35 cents per $100 of the amount secured (Fla. Stat. § 201.08(1)(b)): $1,400 on $400,000.
• Nonrecurring intangible tax, 2 mills on each dollar secured (Fla. Stat. § 199.133(1)): $800 on $400,000.

A refinance can owe less than that, on conditions only the loan papers show. A note that only renews an existing note, signed by the same borrower and not enlarging it, is not taxed, nor is the mortgage securing it, and a renewal that increases the balance is taxed only on the increase (Fla. Stat. § 201.09). Refinancing with the original lender or its assignee owes no intangible tax up to the unpaid principal and accrued interest of the loan the tax was paid on (Fla. Stat. § 199.145(4)). A refinance with a new lender usually meets neither, and is taxed on the whole new loan.

The recording charge for the new mortgage is set by statute by the page. The closing cost calculator works out all of it for a refinance from the loan amount.

How is the old loan paid off?

From the new loan, at the closing, on a written payoff. Florida calls it an estoppel letter: the lender or servicer must send one within 10 days after a written request from the borrower or someone acting for them, stating the balance as of a date and the interest accruing each day after it (Fla. Stat. § 701.04(1)). We order it the day the file opens.

Within 60 days after the loan is paid in full, the lender must execute a release, have it acknowledged, send it for recording and send the recorded release to the owner (§ 701.04(2)(a)). We follow it until it is recorded, because an old mortgage left open on the record is a problem at the next sale.

A home equity line of credit being paid off needs one more step. Paying the balance does not close the line, so we ask the lender in writing to close it to further draws with the payoff.

Can the borrower cancel after signing?

On a home, usually yes, for three business days. Where a loan is secured by the borrower's principal dwelling, each owner whose interest it encumbers may rescind until midnight of the third business day after the latest of signing, receiving the notice of the right to rescind, and receiving the required disclosures (12 C.F.R. § 1026.23(a)). Until that period expires, no money may be disbursed other than in escrow (§ 1026.23(c)), so the new loan funds and the old one is paid off after it.

For this rule a business day is every day except Sundays and federal public holidays (§ 1026.2(a)(6)). A Thursday signing usually funds on the following Tuesday.

The right does not apply to a refinance by the same lender of a loan already secured by the home, except to the extent the new amount financed is more than the unpaid balance, earned unpaid finance charges and the costs of the refinance (§ 1026.23(f)(2)). It does not apply to an investment property that is not the borrower's home, or to a loan to buy the property.

How does a refinance closing run?

1. The file opens with the lender's title order, and the search and the payoff are ordered that day.
2. The search is read, and anything recorded against the property or the borrower — a judgment, a code or association lien, an old mortgage never released — goes to the borrower and the lender in writing with what clearing it takes.
3. The commitment issues to the lender's requirements.
4. The borrower signs, in our office, wherever they are, or by remote online notarization where the lender accepts it.
5. The loan funds once any right to cancel has run, the old loan is paid off, the new mortgage is recorded and the policy issues.

Common questions

Do I need a new owner's policy when I refinance?

No. The owner's policy from your purchase covers you for as long as you own the property. The lender's policy on a refinance protects the new lender.

Who chooses the title company on a refinance?

Often the lender, and sometimes the borrower. If your lender lets you choose, ask it to send us the title order.

Does a cash-out refinance change anything?

The taxes are on the whole new loan, and a renewal reduction, if one applies, reaches only the part of the loan that continues the old one. The cash goes to you after the old loan is paid off and the right to cancel has run.

What do you need from me?

The lender's name and loan officer, your current lender and loan number for the payoff, and a copy of the owner's policy from your purchase if you have it. If anyone on the title has died, married or divorced since the purchase, tell us at the start.