Situation…no property yet…asking questions prior to…if I enter into an owner financing situation…is it typically prohibitive for me to refinance after the proper seasoning period?
Pointed question is this…will I be able to attain ownere finance and then get out of that original mortgage into a more favorable one. I don’t see why I would not be able to but is it common for there to be a clause that keeps you in that owner deal?
This sounds like a newbie question because it is!!!
Hi,
Once you have closed and recorded an owner finance sale the seller can not go back and change any of the financing on the property.
Now if your the borrower provided there is no minimum terms or conditions written in the loan you can refinance at any time once you meet your lenders requirements
GR
Hi
There is rarely a clause in a owner contract that would prevent you from refinancing. Just make sure there isnt one in there before you sign. Also dont allow a pre-payment penalty to be included in the contract either.
As for refinancing, typically if you have owned it for less than one year, it will be considered a purchase by the lender,and you will be required to have the proper down payment for the loan program used. This could cause you to bring money to the table to be able to close.
If you have owned it for more than 12 months, then its treated as a refinance and the appraised value would be used instead of the original purchase price.
Oh and one other bit of advice, always always always put yourself on title to the property. If you are not shown as the owner of record, and the seller remains on title, then if they were to get a judgement or lien for a debt they owe or something of that nature, it now affects your property. By recording yourself on to title as the owner, it eliminates this problem.
Now this brings up the other issue, and that is that if the seller has a due on sale clause on their underlying mortgage, then a transfer of title can cause the due on sale clause to be invoked and the lender could start foreclosure on your seller unless they correct the situation. I dont mean to scare you, but things to consider. If you look around on this site you will find methods to avoid the due on sale clause.
Good Luck