Is there occupancy time requirement for home refi going from 5 yr balloon to 30 yr fixed with 20% down. Possibility of relo within the year.

Asked by Nancy, Raleigh, NC Sat Jan 19, 2013

I had assumed if loan has no pre-payment penalty that I could refi or sell at any time but I see some posts regarding new loans ( which the refi would be new loan even though on same house) having a requirement to remain in house for a year before selling or refi with different company. Can anyone clarify this a information? If such a restriction exists, is this a federally oriented or state oriented restriction or entirely up to each lender if not FHA or VA insured loan.

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Andy Matejka’s answer
Andy Matejka, Mortgage Broker Or Lender, Greensboro, NC
Mon Jan 21, 2013
Aaron has the best answer for you, in my opinion, but that should be expected since he's a licensed loan officer and you may expect someone like him to have the most up to date and valid information for you.

There must be a net tangible benefit to the borrower for your loan to be eligible for a refinance in NC.

Your scenario does include some subjective information that is interesting to note. You mentioned you might be relocating. Just as it is impossible to know if you will not be hit by a car crossing the street next can't determine if you will be transferred from your job.

However, while your loan is being underwritten, any heightened probability of disruption to continuity of current application conditions will increase the risk for your loan program.

Furthermore, the risks may vary depending on whether you are applying for an owner occupied loan vs. an investment loan.
0 votes
My NC Homes…, Agent, Chapel Hill, NC
Sun Jan 20, 2013
I've been buying and selling real estate for roughly 35 years, I haven't seen a prepayment penalty clause in over 15 years. I have seen just a few loans that require that you hold them at least 6 months and I would have no particular concerns if I were you. To play it safe specifically ask your lender if there's any type of pre-payment penalty clause in the loan their proposing for you..

I wish more buyers and sellers were as cognizant of things as you seem to be.
1 vote
Larry is right. Definitely speak to a lender. Make sure they are competent though....
Flag Sun Jan 20, 2013
Aaron Herste…, , Raleigh, NC
Sat Jan 19, 2013
Hi Nancy,

That is a great question. And here is the correct answer:

Since you mentioned we are not speaking in terms of FHA or VA financing; there is no minimum time frame before you can refinance the loan you are describing above. Please note that there will need to be a NET tangible benefit for you to consumate the transaction. I would be more than happy to give you the particulars if you like. Below is my contact info and I hope this has been useful information and answered your question.

Aaron Herstein
Senior Mortgage Consultant

New American Mortgage
Raleigh, NC

NMLS 119406
NC-I 155804
0 votes
Daniel Fisher, Agent, Charlotte, NC
Sat Jan 19, 2013
Good evening, Nancy:
If you are getting an FHA insured loan as an owner occupant, you generally have to make the property your principal residence and live there for at least a year, but there are several exceptions, including change in employment. The best thing to do would be to talk to your current lender or to the attorney who served as the closing agent for your purchase. They should be able to answer your questions. If you appreciate an answer, please give thumbs up. For the most helpful answer, please say thanks with a best answer click.
0 votes
Nancy, Home Seller, Raleigh, NC
Sat Jan 19, 2013
I probably should have posted under financing but want to now share some specific answers regarding my question above. Hopefully this can help others with this same question. I have gotten 3 inputs from people knowledgeable in home finance that say the rule I am talking about regarding having to occupy the home for 1 year after assuming mortgage is mainly to prevent people from refi at lower rate and then renting. But one response did say even if you vacated the house within first year ( and did not rent) the bank could demand loan pay off if they found out.

Bottom line, as i understand it, is if the loan does not have a pre-payment penalty, it appears you can refi or sell and move the next day or any time after. If anyone has direct knowledge to the contrary please chime in on this issue. I actually did receive some faulty info from a presumed home loan professional which is what lead me to post the question.
0 votes
Ron Thomas, Agent, Fresno, CA
Sat Jan 19, 2013
You are aware enough to describe your situation,
but not aware enough to read your loan contract?
0 votes
Really Ron?? that is not very nice.
Flag Sat Jan 19, 2013
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