can I refinance current house, then buy new house?
Carrie G asked:
I still owe on the mortgage for my current house and am planning to buy a new house (and try to keep my current house).
Instead of borrowing from my 401k for the down payment, my mortgage guy suggested I refinance my current house (as a primary residence to get a better rate) then apply for the mortgage for my new house.
I told someone about this and they said doing that would be fraud because I’m refinancing my current house as a primary residence and I need to live here for a year.
Is this true? How much trouble could I get in?
Thanks.
I’m trying to rent my current house through a realtor - so there is an MLS for it (don’t know if that makes a difference)
Troy
I still owe on the mortgage for my current house and am planning to buy a new house (and try to keep my current house).
Instead of borrowing from my 401k for the down payment, my mortgage guy suggested I refinance my current house (as a primary residence to get a better rate) then apply for the mortgage for my new house.
I told someone about this and they said doing that would be fraud because I’m refinancing my current house as a primary residence and I need to live here for a year.
Is this true? How much trouble could I get in?
Thanks.
I’m trying to rent my current house through a realtor - so there is an MLS for it (don’t know if that makes a difference)
Troy
Tags: Buy House, Mls, Mortgage Refinance
May 20th, 2009 at 3:31 am
Darryl
ok
May 20th, 2009 at 9:03 pm
Sandra
oh my god…he is going to jail…loan fraud is a Federal offense punishable up to five years in prison and $50,000 fine….with 25,000 mortgage jobs lost this month alone…your idiot is next.
Ps. people do it all the time…no worries….
May 21st, 2009 at 6:16 pm
Frederick
just remember that refinancing a home is like buying again. You have to pay almost all the same fees to the mortgage company. I would never refi a house for a down payment on another because of all the fees you will incur. Borrowing from your 401k makes more sense and the loan will not be fraudulent. You might want to find a different mortgage broker. he sounds like he isnt advising you in your best interest.
May 22nd, 2009 at 6:17 am
Carl
Your friend is correct–sort of. Since you currently live in the house, it really is your primary residence so it’s not fraud to refinance it that way. However, the appraiser will do an MLS search and report that you are trying to rent it. You could take it off MLS before you apply for refinancing, and explain to your lender that you considered renting it but changed your mind. You wouldn’t really get into trouble, but your loan could be declined.
Keep in mind that most 401k programs only allow a loan/withdrawal for your first home. You may not be able to use that money without penalty if you already own a home. Check with your 401k provider.
Good luck!
May 22nd, 2009 at 10:41 am
Tommy
I wouldn’t refi but find out if you could get a Blanket Mortgage. This way, you’ll have to make 1 payment on both properties. Also make sure you have enough funds put aside in the event the apartment is vacant from time to time. Also, if you are not handy with tools, it could cost you a lot of money and aggravation. If you could find a partner that is handy and wants to buy into the house, offer a percentage of the rent.
May 22nd, 2009 at 1:38 pm
Karen
Best Anwser- Chosen by Voters
You need to call Frank immediately at 661-635-4900 or 919-802-3119 or 866-728-8587. He can get you financed with his network of over 400 lenders (up to 100%) even with bad credit. He has helped me with 4 properties and it has saved me thousands per month. He also helped me with foreclosures and made me a ton of money. He is an expert in this area.