Refinance Mortgage When House Is Still Listed For Sale By Owners

This BLOG On Refinance Mortgage When House Is Still Listed For Sale By Owners Was PUBLISHED On June 8th, 2020

In the event, homeowners have listed their home for sale and no longer want to sell and now have decided to refinance.

• Can homeowners refinance a mortgage when the house is still listed for sale by owners?
• Do they need to take it off the market to refinance a mortgage when the house is still listed for sale?
• What are their options?
• Are homeowners going to have a tough time?
• Yes, but it is possible
• Depending on what kind of loan homeowners are seeking will determine on how painful the process can be
• Homeowners shouldn’t have much trouble getting a rate-and-term to refinance
• But trying to complete a cash-out refinance can be difficult, if possible at all
• Most investors will want the home off the market for at least 6 months before allowing the cash-out refinance
• What are your options?
• Can homeowners do a cashout refinance a mortgage when the house is still listed for sale?

In this article, we will discuss and cover Refinance Mortgage When House Is Still Listed For Sale By Owners.

HUD Refinance Mortgage When House Is Still Listed For Sale By Owners

Here is HUD Refinance Mortgage When House Is Still Listed For Sale By Owners:

• Path of least resistance will be to use an FHA loan
• According to the HUD 4001.1 HANDBOOK, FHA does not have any restrictions when it comes to time frame in which you can refinance a home which is listed for sale
• The borrower and property must be eligible and qualified for an FHA loan
• The guidelines clearly state the fact that the property is listed for sale does not affect the ability to refinance the property
• This includes a CASH-OUT REFINANCE
• Depending on the loan-to-value (LTV)

Conventional Refinance Mortgage When House Is Still Listed For Sale By Owners

• Freddie Mac – If you have listed your home for sale, on MLS (multiple listing service) or for sale by owner (FSBO), you must remove the listing and wait 6 months before applying for a cash-out refinance
• You will also be limited to 70% loan-to-value (LTV) until the listing has been removed for 12 months\
• Note Manufactured housing is limited to 65% LTV 

Fannie Mae – Very similar to Freddie Mac, if the home is listed on MLS or for sale by owner your application date must be on or after 6 months and 1 day have elapsed before eligible for a cash-out refinance.

NON-QM Refinance Mortgage When House Is Still Listed For Sale By Owners

• NON-QM is a gray area in the mortgage lending world
• Each investor has the ability to make their own guidelines
• This also allows them to make exceptions on a case by case basis
• And unlike QM MORTGAGE rules, they have the ability to add a prepayment penalty to your loan, so even if your home is listed for sale, you can remove the listing, and complete the cash-out refinance
• NOTE: To get exceptions on a NON-QM loan, you do need to have a strong loan file with compensating factors

A compensating factor could be one or more of the following: low debt-to-income (DTI), low loan-to-value (LTV), cash reserves in the bank, longevity on the job, or minimal increase in housing payment.

Recapture: Buy Back Period

The reason lenders are so strict on the timeframes to complete a cash-out refinance is simple. Lenders collect interest on each payment that is made to the loan. If you pay the loan off quickly, the bank can lose money. Many lenders have a buyback period, which means they must buy the loan back from the investor if the client is not in the loan long enough.  

The general rule of thumb is you are expected to stay in your home loan for at least 12 months. The average American is in their home loan for 5 years. 5 years seems to be the time for the family to upsize or downsize or complete a refinance. That being said if you’re in the market to complete a refinance, reach out to us at Gustan Cho Associates for more details. The team at Gustan Cho Associates are experts in Refinance mortgage lending! You can reach us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com.

Documents Required To Process Mortgage

Below is a list of documents you will need to get the ball rolling: 

• Current Mortgage Statement
• Last 30 Days Pay Stubs
• Last Two Years W2’s 
• Last Two Years Tax Returns
• Driver’s License
• Mortgage Statement
• Homeowners Insurance Policy 

Either I or one of our highly skilled loan officers will help you complete your new loan! We deal with many clients who may have been turned away for LENDER OVERLAYS! Even if you have been turned down by a lender, give us a call. If we cannot complete your loan today, we will help you set up a financial plan to qualify as soon as possible! There are very few situations we have not seen before.