a home you want to sell
I recently wanted to do a cash-out refinancing on my home.
Because I had it up for sale up until about a month ago, I was told I had to wait
six months to refinance with cash out. Is this an industry standard? I was totally
approved for the refinancing until that question came up.
Mortgage loans face certain underwriting standards that make the
loans marketable to mortgage investors. In general, mortgage investors
are looking to lend money long term and don't like to lend money
to refinance a mortgage only to have that mortgage paid off in a
few months when the property is sold.
There can be some variation in underwriting standards
across lenders, and not all lenders will require that your home
be off the market for six months before they will refinance your
mortgage. E-Loan, for example, has this to say on the topic:
The following is an excerpt from the mortgage origination
guidelines of a nonprime lender:
|Underwriting properties listed for sale |
So, it can be done. You might just have to work on
it a bit. Should it be done is another matter. If your
intent is to sell the property, then paying the closing costs on
a cash-out refinancing doesn't make much sense. It's just too
expensive a way to tap your home's equity.
A home equity line or loan could be a better short-term
solution, but there are underwriting standards to consider there
as well. There may also be a prepayment penalty if you close
out the home equity financing within the first few years of the
If you're still convinced you need a cash-out refi
on your recently unlisted property, you should consider working
with a mortgage broker. Look for an "Upfront Mortgage
Broker," as described by Jack Guttentag in a feature, "Want
your mortgage wholesale? Try an upfront broker," he wrote
To ask a question of Dr. Don, go to the "Ask
the Experts" page and select one of these topics: "financing
a home," "saving & investing" or "money."