200k, 300k, Cash Flow, Clarification, Closing Costs, Financial Approach, Financial Investment, home, House Sale, lender, Lenders, listed, Long Term Investment, Long Time, Mortgage Refinancing, New Houses, New Job, New Location, Options, refinance, SALE, taxes, Time Builders, won't
Why won’t lender refinance a home that is listed for sale?
I have a home in GA. Was appraised at 300K for taxes a year ago. I have a 15 yr mortgage and owe about 190K. Market is bad, and I don’t expect to sell for even 250K for a long time. Builders are selling similar NEW houses for 200K or less – I can’t compete. I am probably not going to recover any more $ that I put into the house, so I want to reduce the payments. Would like to refinance to 30 yr mortgage to reduce monthly payments while market recovers enough to sell without giving away. If I pay closing costs for refinance, what does the lender loose if I sell the house in 6-8 months?
Details for clarification. I moved away for new job and the house has been for sale for a year. I need to get rid of this house as soon as possible. I need cash flow to live in my new location. Spending 2K a month that I will not be able to recover (because I will need to sell at very low price) – does not seem smart. I cannot afford to “wait out the market” and get the full value out of the house. Looking for ways to slow the cash flow into the mortgage. Refinancing to 30 yr seemed to be a quick way to reduce the monthly bleeding of funds until I sell – I know it is not the best financial approach for long term investment, but that is not the position anymore. Now, the house is just a burden. I am paying $1K in interest now each month, but *if* I could pay $4k in closing, and reduce the monthly payment to $500 (guesstimates) , I could make up the closing in 8 months while increasing my monthly cash available. But, it seems lenders will not refinance if my home is for sale. Options?
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Lenders make their money off the monthly interest, so if you are in the process of selling the home they stand to make very little on your loan. And since most lenders sell the note so they can lend more money, they wouldn’t be able to find any buyer for your note. Basically, you would be using their money, and they would not make the profit they normally make on a longer-term note.
My suggestion is to contest the tax appraisal amount using the new homes priced at $200k as comparisons to justify a lower appraisal on your existing home. Or, take your home off the market and apply again for a refinance in a few months.
Good luck!
why sell at all?
put a biz into the house or rent it out.
pay down the mortgage. HOw many lenders
are you talking to?
I hate to say it but your appraisal a year ago means nothing now. If your house does not have at least 20% equity, or you are not able to put that same amount of money down towards the home now, a lender will not touch your house, especially in this market. Even in a good market this would hold true and in this climate all lenders are tightening up their lending practices because of the unstable market. Keep in mind too that most economic forecasts put the market rebound at 12 – 18 months, not 6 – 8. Lenders got burned by betting on the housing market when it was good. They are not about to bet on a housing market when its tanking.
The lender looses the opportunity to sell the house in the current market and the interest they could earn on the money if they force the sale now. If they sell now, they can turn around and invest the money elsewhere for possibly more money than they could get refinancing. Also, they may believe that selling it now will bring them more money than what a sale in 6-8 months will bring. I know it sounds mean, but it might very well make the most sense financially for the bank to force the sale now.
OMG…..Who in the world told you that was a good idea?
You aren’t going to be saving anything or gaining any equity, in fact, you’ll be flushing probably $4,000 to $6,000 down the toilet overnight by doing that.
DO NOT refinance this property if you are on a 15-year loan. Yes, you’ll find a shady loan officer to convince you to do that…but then again, he’s on commission.
You will most likely have to pay a HUGE pre-payment penalty if you sell the house in less than one year after you refinance, and the market is NOT going to recover in 6 to 8 months…so I really, really hope you are not going to bank on that. In fact, experts have predicted it is going to be a 3 to 5 YEAR recovery process…if that happens at all.
You can’t refinance right now anyway if you have had the house for sale in the last year. Banks will turn it down for that reason alone.
Please, please, do not touch your current loan. It will be the worst financial mistake of your life.