| One of the most common questions that financial advisors get from homeowners is when to refinance a mortgage. When seeking mortgage refinancing help you want to make sure you are comparing quotes from credible lenders. Each loan company should be proving you with loan disclosure and the "Good Faith Estimate." Compare the refinance rates, term, APR and closing costs.
In any refinance transaction, the new loan company funds the mortgage by wiring money to the bank of the escrow agent or attorney who is responsible for disbursing the money. As soon as the new mortgage company sends that money, the clock starts ticking and you pay interest.
The old loan company doesn't get the payoff loan immediately. Some states, including California, have "good funds" laws that require the escrow agent to sit on the money overnight. There might be paperwork to fill out at the title company and at the county recorder's office.
And, customarily, the escrow agent pays off the old loan by sending a cashier's check by overnight courier. The courier is cheaper and less of a hassle than wiring the money. All the while, you're paying interest on both loans.
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