How to tap equity in OO SFR 50%CLTV high debt ratio HELP!!

I am self employed, real estate broker (10+yrs), can’t show income and credit has dipped to mid 600’s due to high debt to available credit ratio-my available credit keeps getting reduced without any late pays, which bites… anyway- I own a (OO) SFR, FMV 325-340k, piggyback loans total 164k (136k and 28k), no other liens (thank God), but no way to tap equity/refinance with cash out due to credit & proof of income that I am aware of. State of Texas, btw…

I am wondering what, if any, options I have- I have considered signing title over to a family member and either pursuing a refinance (somehow this used to be possible with an existing note under X’s name and title under Y’s name, as long as Y was on the title, bank would refinance into Y’s name) or a home equity loan (maybe the scenario with X & Y was for a home equity loan and I have my wires crossed/neurons blocked) or straight purchase…

If this makes any sense to anyone, I am in dire need of input/direction- I can’t seem to think straight and am at my wit’s end, terrified that I will end up losing the equity I’ve built in this home… any help appreciated!!!


You know that in the State of texas your max LTV on a cashout is 80% which based on the worst case in your value range ($325K) would give you approximately a $260K loan amount. However based on your FICO score it will be VERY expensive for you to tap that equity because of the Fannie Mae FICO pricing adjustments( seriously it will cost you like 5 points). So I would avoid that scenario if possible.

If you transfer the title to a family memeber they would have to wait at least six months to do a cash-out as there are now seasoning guidelines in place. Not to mention you could run into continuity of obligation issues.

I think your best option is to sell it directly to a family member. Even your best case scenario for a cash-out will be a loan amount of 272K because of the 80% rule. You could sell the house to a family member using an FHA loan and have a max loan amount of 271k. Which would put about 107K in your pocket minus closing costs. The other nice thing is that you could gift the family member the down payment. Hope this helps.

Thank you for the response and input/feedback- much appreciated! If I had transferred title six months (or seven) ago but hadn’t recorded it with the county, would that effectively satisfy the seasoning requirement? For instance, I had a signed special warranty deed transferring a property into my name, but I waited over a year to file and record it with the county; the effect was the same as if I’d filed it when it was executed… I was able to go back and claim homestead exemption for the prior year’s property taxes…

Am I spinning my wheels? :slight_smile: I really just need to tap equity for the short term- I plan to put the house on the market and sell within a year…

Thanks again!

The problem with a title transfer only is that it may not meet the continuity of obligation guideline.

An acceptable continuity of obligation (assuming that there is an outstanding lien against the property) exists when:

There is at least one borrower obligated on the new loan who was also a borrower obligated on the existing loan being refinanced.

The borrower has been on title and residing in the property for at least 12 months and has either paid the mortgage for the last 12 months or can demonstrate a relationship (relative, domestic partner, etc.) with the current obligor.

The existing loan being refinanced and the title have been held in the name of a natural person or an LLC as long as the borrower was a member of the LLC prior to transfer. Transfer of ownership from a corporation to an individual does not meet the continuity of obligation requirement.

The borrower has recently inherited or was legally awarded the property (divorce, separation).

It is nice to get info from someone that knows what they’re talking about :slight_smile: Thank you for lending your expertise here… I am surrounded by LO’s that don’t seem to have a clue; I can’t say I would, either, lol… but it is nice to have some wisdom to tap-thank you if I haven’t shouted from the mountain top :wink:

So… I would need to be on the new loan… and we’re still speaking of a refinance… the notes have been sold to servicing cos, so I’d need to find a lender that would be able to work this with me on the note… maybe… hmm… are you a mortgage broker/LO? I thought I saw a Houston contact number, but my eyes are kind of crossing! It would be great if you had a minute to let me spew the remainder of my thoughts (I’d keep it short) in case there are facts that could work for or against me, or shed light on the Holy Grail… I know there is a solution that makes sense… I’m just confusing the heck out of myself in my quest to find it!