Hello All, I go into contract or should I say closing this month on a home; where the owner is carrying 50k of the purchase price = 25% I worked out a 5 yr note interest only payments no prepayment penalty at prime plus 1. My question is how soon can I refi and cash them out. Do I have to wait one year before I can refinance or can I do it sooner and refi only a percentage of the purchase price of the house, enough to cash the owner out. Also If I can refi in lets say 4 mths, should I ask the owner to take a discount on their note because I am cashing them out sooner than expected?
Any thoughts or comments are greatly appreciated,
Thank You, Youngone
Howdy Youngone:
You can refinance at any time you wish unless there is another lender involved that has a prepayment penalty or if you are getting a home equity loan here in Texas and perhaps some other states too. Here you can only refinance once a year I believe.
As far as a discount you never know what to expect when paying someone off early especially that early. You could save a few grand or as much as half. You may even want to negotiate this before the closing something like 50 in year 5, 45 in year 4. 40 in year 3 etc… He may also already have the note sold to a note buyer at the closing and get funded a discount then. You would be smart to ask before he sells the note for $25.000 and find out that you could have bought the house for that much less if you had known. Never hurts to ask for what you want but be carefull because sometimes you may get it.
Thank you for the response. I believe that here in new york we have to wait a year according to some mortgage brokers I spoke to.
Thanks, youngone