What Can Happen if You Take Your Home Off Market and Decide to Refinance InsteadSeptember 19, 2019
Therersquo;s some initial interest, a couple of ldquo;lowballrdquo; offers that border as an insult, but they pay little attention to them. Theyrsquo;re just going to wait. They hire a professional house cleaner to perform a thorough cleaning. They pay some money to stage the home and also pay for a storage unit to house the furniture the stager didnrsquo;t like. A month passes, then the phone calls stop coming in. Two months go by and now itrsquo;s heading into the third month. The homeowners scratch their heads a little bit and decide theyrsquo;re not going to get what they need, so they decide to go ahead and refinance their current mortgage and at least get their monthly payments down. But there now may be a problem.
When a lender accepts an application for a home loan, the research wheel will begin to turn. An appraisal will be ordered. The appraiser will take the appraisal order and start looking for homes in the area that have recently sold and how long it took to sell the homes. The appraiser will also note which homes in the area have been listed and make note of that on the appraisal. This can mean the subject property pops up on the MLS. A mortgage company wonrsquo;t be all that excited about approving a refinance application in this scenario. Why?
The primary reason is cost. Cost to the lender. There is enough overhead a mortgage company goes through that it can mean the lender wonrsquo;t start to see some profit from the interest on the new loan until maybe two years have passed. Otherwise, approving a short term loan becomes an expense, not profit. If a lender reviews an application and sees the property was recently taken off the market, there will be some explaining to do. The loan application wonrsquo;t automatically be declined, but it can make it more difficult to get the lender to ldquo;yes.rdquo;
Why did the home not sell? Is the current real estate market softening? If the markets come back soon, will the owners decide once again to sell the property, retiring the note? The owners in this situation will be asked to provide an explanation letter assuring the potential lender that they have permanently changed their mind and selling is out of the picture. Maybe the owner just wanted to get their toes in the water and see what type of activity could be generated. In any scenario, taking a home off the MLS then immediately applying for a refinance might be more difficult than first imagined.
The difference is whether or not the owner intends to keep the property. If the owners can convince the lender it was essentially a ldquo;toes in the waterrdquo; thing, it most likely wonrsquo;t be an issue. But what if it is? Then itrsquo;s probably best to sit back a few months and wait. And just maybe the owners might decide to stay after all, and the lenders can >