19 Apr

What to Do if Your Lender Finds Out You’re Refinancing a Listed Property

Real Estate in UtahReal Estate in UtahGetting caught that you’re refinancing a piece of real estate that you’re trying to sell is one of the shortest routes to a refinance denial. Put yourself in the lender’s shoes, why should you grant a borrower with a new mortgage, possibly with a lower rate, that has no intention to even stay in the house for at least a couple of years.

It’s not uncommon for Utahns to sell an unpaid house and cut the mortgage term short, but lenders make the most money in the early years of the deal in interest. They expect you to pay off your mortgage early than the date stated on the agreement at some point, not at least in the first year of the refinance.

If you put your property on the market to fish for potential buyers, but failed, and your lender discovers it, he or she might consider it an act of dishonesty or betrayal. By that time, it might be too late for an explanation.

So if you have a listed property right now, do the following prior to applying for a refinance:

Be Proactive

Take the initiative and come clean before anything else. Proactively asking lenders if they mind that your property is listed is a small gesture that can speak of your character as a borrower. In many cases, your action would be appreciated.

Write a Letter

Producing a letter why you had a change of heart might help as well. This way, you can properly express your motivation for selling the property and applying for refinancing despite your desire to get it sold.

Take it Down

Most experienced mortgage brokers in Salt Lake City, Orem, and Sandy would simply advise you to remove the listing. Why would you risk any future complication with a lender if you can do something now to prevent it, right?

It’s convenient on your part to wait for a potential buyer and the green light from the refinancing lender, but it’s unethical. You have to make a decision what you would like to do with the property before you apply for a refi.