If your home is currently listed for sale, or was previously listed in the past six months, you may experience some trouble when refinancing your mortgage.
Many banks and mortgage lenders aren’t keen on offering financing to borrowers who were unable to sell their home on the open market.
And it really makes perfect sense. Why would a bank or lender want to finance your home at a certain, perhaps bloated value, if no one is willing to buy it at that price in the real world?
Before you list your home, plan for the worst. Make sure you have enough cash reserves to make your mortgage payment each month in the event that your home doesn’t sell (or sell quickly).
After all, you may be stuck with an unsold home and an adjustable-rate mortgage that’s due to rise. That can be a deadly combination, especially if you’re unable to refinance after the fact.
Assuming you do hit dire straits, there’s probably a lender out there willing to refinance your current loan, but it will likely be at a premium.
Alternatively, you may just need to wait it out. Once the home is de-listed, there may be a waiting period of six months before you can get financing. Just know that during that time, home prices could fall even more, denting your chances of securing financing.
It’s a tricky lending environment at the moment, so tread cautiously!