Recent Answers to Mortgage Agreement (OLD) Law Questions
Can a lender require me to pay off my existing mortgage in full before refinancing?
Mortgage
Mortgage Agreement (OLD)
Texas
I am currently considering refinancing my mortgage to take advantage of lower interest rates. However, I recently received a letter from my potential lender stating that I must pay off my existing mortgage in full before they will approve the refinance. This requirement caught me off guard as I was under the impression that refinancing involves transferring the balance from my current mortgage to the new loan. I am wondering if this is a common practice among lenders and if it is legal for them to demand full repayment of my existing mortgage before refinancing.
Phillip Z.
Typically, you pay off your existing mortgage at the closing for the refinanced mortgage. At closing, some of the funds from the new loan are used to pay off your old loan. This ensures that the existing mortgage is fully settled and the latest mortgage takes it's place.
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