Refi before you sell?????

[mortgage_man]

Newb here!

I have a client that is going to put their house on the market in Sept. and they are buying a new house in Oct. I was hoping I could do a refi for them on the house they are in now to reduce their payment while they have it on the market......

What's the best way to do this?

Is it to risky to get into a 6mo. or 1yr ARM? Option-ARM?


Any help is appreciated.

Thanks

Phil

[homes2loans]

I might recommend that you not put them into any short term loans because you have no guarantee on the end results of the sale. I would suggest that you put them into a Hyrbid Option or a 1 Yr Option with No prepay, just in case their home is on market longer than planned. However, if you are the one doing the loan on their new purchase, I wouldnt refi this home unless you are paying off debts to improve their financial status otherwise the cost of the refi may not be beneficial to them. They will have cost associated with their sale and could use that equity to pay buyers closing cost. Then get two referrals upfront for the great service.
Be Blessed

[mortgage_man]

I am doing the purchase for him but they don't want to pay all of the interest if they don't have to while the house is on the market.....on top of paying the new mortgage payment......

probably do an option ARM.....but can't make any money on them anymore without a PPP.

[Erik]

H2L makes a good point... it's probable that closing costs would outweigh the interest savings while the home is on the market. The first thing I'd look at is whether or not you can actually save them any money by doing the refi, all things considered.

[MortgageDiva]

Phil,
I would put him on an option arm and consider keeping the property as an investment instead of selling if it is worth less and the money isn't needed for the purchase of the new property. Then he would have the income from the rental and the mortgage would be mostly paid by the income it generates.
Make your money on the purchase and in the future he can sell the property and you can make money on it again.
Best of luck.

[GLOAT]

Clearly, your clients are not "Practiced Planners". In my opinion, your wisest move for your clients would be to offer to Pre-Approve, or not potential buyers they refer to you for their current residence. Refinancing them will not only be costly for them, but you are privy to the fact that they are currently in the process of changing what is to be considered there "Primary Residence". Convincing them to become landlord's without the mental preparation will certainly lead to bigger problems. The average person, doesn't rush to fix their own toilet when it has a "running" problem. How do you think new lanlord's created from situation will approach having to repair a porcelain God someone else parches on?

[MortgageDiva]

Gloat,
You Made A Great Point About Not Forcing Someone Into Being A Landlord. I Didn't Even Consider It. I Have Heard It Said So Often That I Hadn't Stopped To Understand What It Really Meant To The Borrower. Thanks For Waking Me Up.