I am thinking about refinancing my mortgage with my existing lender so I can get a better interest rate. Can I do that without signing all the documents I signed when I first got my home mortgage and paying all the closing costs all over again?

Legally, you and your lender could modify your existing note and if the principal amount of the loan was being increased over the original amount, or if the maturity date of the note were being extended, the lender may require that an amendment of the mortgage be recorded at the registry of deeds. That may be the case if you have a local bank as your lender. However if your mortgage is being serviced by a national servicer, like a Wells Fargo or a Bank of America, it could very well be that your loan has been sold and is part of a mortgage pool. If so, you will not be able to simply modify the loan with your lender. You will have to do a whole new mortgage loan transaction because basically the lender will be creating a new financial product to be sold. When a loan is sold very often it will become part of a mortgage pool were the principal and interest payments can be diced into a bunch of different segments and sold off at different rates of return depending upon the priority of the portion of the principal in the mortgage that the investor is entitled to. That slice and dice is consistent with a whole bunch of other mortgages in the mortgage pool so it becomes impossible to modify one without affecting the whole pool. So when you have your discussion with your banker about refinancing, you better first discuss how the loan will be changed either through a modification or a whole new mortgage loan. You can then evaluate whatever the true saving in interest may be and whether or not it is worth it based upon the additional closing costs that you will incur with the new loan.

 

If you have questions about this or any other legal matter, please contact Tom Bennett at (617) 531-6574 or tvb@barronstad.com.

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