Can You Sell Your Home After Refinancing?

Can You Sell Your Home After Refinancing

Can You Sell Your Home After Refinancing?

Can you sell your home after refinancing? If you refinance your mortgage, you might be able to get cash out of your home without selling it. Many people choose to refinance their homes when the market allows for it. According to Bankrate, 28% of homeowners in the U.S. refinanced their mortgages last year.

Refinancing isn’t always the best option, though. There are downsides to consider before deciding whether or not to do it. It will typically cost you more in the long run and take you more years to pay off your mortgage. 

Plus, what happens if you want to sell your house after you have completed refinancing it? In this blog post, we'll explore what you need to know about selling your home after refinancing. 

Reasons To Refinance

When you refinance, you pay off the original loan and take out a new loan, which will usually offer better terms. There are many reasons to refinance, including tax benefits, refinancing to a shorter term, or paying down debt. Here are some of the most common reasons to consider refinancing your mortgage:

Shorten Your Term

Shortening your loan term will reduce the length of time to repay your loan. This will allow you to own your home sooner. Shortening the term could save you thousands of dollars over the life of your loan.

Take a Lower Interest Rate

Refinancing allows you to lower your interest rate and save money over the life of your loan. Lowering your monthly payments will help reduce your total debt load and could potentially improve your credit score. It could also save you thousands of dollars over the life of your loan.

Your credit score affects how much you will pay each month. In many cases, you can qualify for a lower interest loan even if your credit score isn't perfect. 

Change Your Loan Structure

Refinancing to a fixed interest mortgage could help you save money over the long term. Fixed rate loans have a lower risk of fluctuating rates. They're also less likely to increase during periods of high inflation.

Lower Monthly Payments

If you've been struggling to make your current payment, refinancing may be an easy way to cut back on your expenses. By lowering your monthly payments, you could free up extra funds that you can use toward other bills.

Lengthen Your Mortgage Term

Lengthening the term of your mortgage will lower the monthly payment. However, it will also add additional years to your loan. Lengthening the term could mean higher costs at closing as well as increased fees. 

Change Your Loan Type

You can change your loan type from adjustable-rate to fixed-rate. This is a good choice if you think interest rates will rise significantly over the next few years. Changing your loan type could save you hundreds of dollars per month. 

Take Cash Out of Your Equity

A cash out refinance lets you borrow against equity in your home. You can use the extra cash to pay off other debts or even invest in something else. You can use the funds from a cash out refinance for almost anything.

How Soon Can I Sell My House After Refinancing?

Selling your house after refinancing isn't always easy. There are many factors that can prevent you from doing so. Some clauses in mortgage contracts can prevent you from selling your house immediately after refinancing. Make sure you read all the terms of your mortgage contract carefully before making any decisions. 

Owner-occupancy Clauses

Owner occupancy clauses can stop you from selling during the first 12 months after refinancing. Make sure to read the fine print in your refinance contract. However, this isn't a hard and set rule. Your lender may allow you to sell earlier if there's a good reason.

Is There a Penalty for Selling Your Home After Refinancing?

Prepayment penalties are fees that most mortgages have. They're designed to discourage borrowers from paying off their mortgages early. A prepayment penalty clause could prevent you from selling your house if you refinance too early. Hard prepayment penalties restrict selling and refinancing within three years. Soft prepayment penalties only apply to refinancing. The rules about how long after refinancing can you sell will depend on the specific terms of your refinance deal.

How Soon After Refinancing Can I Buy Another Home?

This varies from person to person. If you have the assets to buy a second home, it may not matter if you refinanced your first one. However, refinancing can impact your ability to sell your existing home. How soon can you buy a house after refinancing depends on your refinance terms and personal financial situation.

When It Makes Sense to Sell After Refinancing

There are some situations where it makes sense to sell your house after refinancing. If you need to move for a new job or some other reason, you may need to sell your house after you refinance it. Selling your house after refinancing could give you more flexibility when the time comes to buy another property. 

In addition, if your refinancing plan allows for prepayments or early payoffs, it may not make much of a difference if you sell before or after refinancing. You'll still get most of the money you put down in your new loan.

If you're considering refinancing before you sell, consider it carefully. You may decide it's better to wait until you’re ready to sell your home. This could help you avoid any prepayment penalties.

There are some situations in which selling your home after refinancing isn't an option. If your house has dropped in value and you owe more on the loan than it's worth, you may not be able to sell it.  

Why You Might Not Want to Refinance Before Selling

A home refinance before you sell will most likely increase your closing costs. Closing costs can add up quickly, especially if you're refinancing within a short period of time. There's a greater chance of losing money if you refinance too soon.  

Borrowing more money to refinance may also have an impact on your credit score. Not only do you have to pay off the principal of your loan, but you may also have to pay closing costs, and appraisal expenses.

Should I Refinance My Home If I Plan to Sell?

A home refinance before you sell could increase your monthly payments, depending on what you changed from your original mortgage. A shorter term would have higher payments than a longer one. Paying more each month can mean a longer wait before you can move.

How Long Should You Stay in Your House After Refinancing?

The length of time you've lived in your home will affect how much you can expect to receive when you sell. Refinanced homeowners should consider whether they want to remain in their homes for at least six months after refinancing. A prepayment penalty will apply if you sell your house before your lender's owner occupancy period ends. You may avoid a prepayment penalty if you refinance within 30 days of buying your property.

Generally, purchasing a house is more expensive than renting in the beginning because you lay out more money in closing costs and to amortize your mortgage. Once you’ve lived there 5 to 7 years or so, it sometimes becomes more affordable to remain in your home than to rent elsewhere. Your financial planner can walk you through the specifics of your mortgage to give you an idea of how long you should live in a house before selling it to maximize your investment. 

However, real life does not often go according to what makes the most sense to every dollar and penny. If you need the cash from your house now for some reason or you need (or want) to move, then the right time to move is now. 

Can You Refinance While Your Home is Listed for Sale?

Generally, you can't refinance while your house is listed for sale. Many lenders won't approve a loan unless there's an intention to live in the house for at least three years. There are certain exceptions to this rule. This doesn't mean you should stop trying to sell your house to get a refinancing deal instead. 

Sell Your Home to a Cash House Buyer

A cash house buyer is someone who buys homes without having you make any repairs or improvements. This allows you to sell your house without a Realtor. This means they can close quickly, often within just a few weeks. Some people prefer to work with a cash house buyer because they don't have to worry about making repairs.

Selling to a house buyer who will pay cash for your home can be a great alternative to refinancing. This could be even more beneficial if you're having trouble selling your home through the traditional real estate market or refinancing it. Cash house buyers can be a great option for people who want to sell their homes quickly and easily, but want to avoid foreclosure or bankruptcy.

If you are refinancing to take equity out of your home because you need cash, you will have to think about whether you want to remain in the home. If you plan on moving or if your circumstances have changed through a divorce or moving for a new job, it may be a better idea to get cash now rather than remain in the home.

House Buyers of America will buy your house for cash. We buy houses fast. If you want to sell your house fast, we make all the arrangements for a no-hassle sale. We buy houses in any condition, and we can close in as little as seven days. We offer free home appraisals and no-obligation quotes to sell your home fast. We can help you with selling your house after refinancing. Our consultations are free, so you have nothing to lose by talking to us about selling your house to a cash buyer. 

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Others simply want a hassle-free solution for downsizing into a smaller home and want equity in their legacy home. Estate Sales House Buyers of America have also helped thousands of people who have suddenly inherited an unwanted or unneeded property. When dealing with an estate, many heirs can’t decide or agree on when to sell the house or who will take care of the paperwork, so the house is left sitting vacant and deteriorating for months or years. Estate sales can bring out the worst in people and families often get torn apart in the process. The traditional real estate process can be complicated and often doesn’t work well for estate sales. The unique estate laws that apply in Maryland can also create some additional complications. So why not try a simple, fast, and hassle-free solution that all of your family members can agree on? Get an all-cash offer in as little as 10 minutes by contacting House Buyers of America. 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