Refinancing is a great way to improve loan terms, lower monthly mortgage payments, reduce your interest rate, and save you money. While there are some restrictions to be aware of prior to refinancing, selling your property soon after refinancing it may still be possible. As long as your mortgage doesn’t have an owner-occupancy clause that requires you to live in it a specified period of time, you can sell the property.
How Soon Can Your Home Be Sold Once It’s Been Refinanced?
Whenever you decide to refinance your home, you need to be aware of any restrictions that exist regarding how soon you can sell it. Depending on the lender, these restrictions often vary. However, the most common are mandatory seasoning periods, stipulations attached to certain loan programs, and underwriting guidelines. Some lenders have specific stipulations to prevent the sale of the home after its been refinanced and require the homeowner to live in it for a certain period of time.
You could also be required to keep your mortgage active for a specified period of time before listing it on the market. Generally speaking, the lender wants to be confident that selling a home shortly after being refinanced doesn’t constitute fraud or other actions against them. So, if you’re planning on refinancing anytime soon and intend to sell your home shortly afterwards, it’s important that you understand these restrictions before you sign the agreement for the refinancing loan.
Owner-Occupancy Clause and Pre-Payment Penalties
It’s important to know what an owner-occupancy clause is and whether it applies to your circumstances if you’re planning on selling your home after you’ve refinanced it. Many lenders require you to live in your home as your primary residence for 6 to 12 months after closing, meaning you can’t sell the property until that timeframe has elapsed. In addition to this, there may be a pre-payment penalty if you pay the loan off early. This protects the lender against loss of interest income.
Does It Make Sense to Sell Your Home After Refinancing It?
While refinancing can provide a great opportunity to lower your interest rate and reduce your monthly mortgage payments, it doesn’t make sense to sell your home immediately after refinancing it. It’s better to wait and build up some equity as this will provide you with additional leverage when negotiating the price with prospective buyers.
To learn more about the above, call Florida State Mortgage Group, Inc. at (954) 359-3000 at your earliest convenience. Our business representatives are available to assist you. If you are still indecisive or need more information about your refinancing, call now.