Is there such a thing as a cash in refinance?
junior asked:
I recently purchased a new home. I will be leasing my previous home with an option to buy. If the tenant exercises their option to purchase the home, is it possible to use my profit to make a lump principle payment on my new home, and then refinance the remaining balance to lower monthly payments?
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I recently purchased a new home. I will be leasing my previous home with an option to buy. If the tenant exercises their option to purchase the home, is it possible to use my profit to make a lump principle payment on my new home, and then refinance the remaining balance to lower monthly payments?
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Tags: Lower Monthly Payments, New Home, Principle
February 8th, 2009 at 10:08 am
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I don’t see why not. Most loans have no repayment penalty. You could also just bring more cash to the next closing. Good idea too.
Have a great night
February 8th, 2009 at 10:27 pm
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Yes. The most common way is via a rate/term refinance. Unlike a cash-out refinance where the purpose it to tap into the homes equity, the purpose of a rate/term refinance is to get a new mortgage having better terms than your current mortgage.
Let’s say your current mortgage is for $250K and you expect $50K from the sale of your former home. Just tell your banker/loan officer that you want to do a rate/term refi, that you presently owe $250K and plan to contribute an additional $50K and want a new mortgage for $200K.
Another possibility is confusing to explain but suffice it to say, a 2nd position home equity line of credit (HELOC) can be used to make a significantly early payoff of your mortgage. Do a web search for “loan accelerators” “loan acceleration” “mortgage acceleration” “mortgage accelerators”.
In Australia and the UK, 1st position home equity lines are quite popular and enable very rapid payoff of the mortgage provided your monthly income on average exceeds expenses.
Good Luck,
Charlie Camp
(800) 373-3130
February 9th, 2009 at 7:47 am
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You can do that. If you can handle the monthly payments you should just apply that huge payment to your existing mortgage. Look at the full amortization table and see how many years you’d shave off of your mortgage by doing that. It will be substantial! You could own your home YEARS earlier by keeping the same payment and just applying that lump sum to your current mortgage balance!!
good luck!