Can we refinanace loan when it is listed on MLS

Question

We have hard money loan and house is fixed , however we don't have buyer yet so would like to refinance from Hard Money Lender to conventional lender.

When we talked to WellsFargo, they said you can't refinance, if it is listed on MLS so what are our options.

Harjeet Bhatti · Answer

@Sanjay Gupta You can refinance by taking out listing from the market. But if its short term requirement for loan will that help you to save money by refinancing. Calculate all the cost before you take this step.

Steve Vaughan · Answer

@Andrew Postell has an excellent point as to the time and expense of a refi.

When people feel rushed and get impatient, their 3 silent cousins- broke, desperate and stupid- move into the back bedrooms of the house they are selling.

Say you go through the pain and the credit inquiries and the $5k expense of refinancing, only to sell 2 weeks later.  Then what @Sanjay Gupta?  Slow down already.

Andrew Postell · Answer

@Sanjay Gupta first, under no circumstances use that lender for investment property lending.  While some people may have lucked out and had a decent experience that lender has misled and mistreated so many investors with loans that many realtors have stopped accepting their prequalification letters.  They have too many overlays for us investors.

To answer your question, technically you CANNOT refinance with a conventional loan while the home is on the market.  The normal parameter is to remove it from the listing for one day, so they can validate it was removed, and then continue on.  You can start your application, go through the entire process, and then take it off the market, and then relist.  That's the way "around" that requirement.

HOWEVER, in order for you to refinance you are going to have some costs related to the transaction.  Usually, those costs equate to about 2 months of hard money payments.  I'm not sure what market you are in but 30 days to complete the refinance, then 2 months just to break even....that's 3 months.  Do you think it will take you 3 more months to sell this home?

Chris Mason · Answer

We've done a few of these. It has to be off the market before the "disbursement of the new mortgage loan." Typically, because of closing costs, it will not make sense if you are just going to re-list it as soon as the refinance closes. When I've seen it make sense is when the HML had an arrangement where they gave you back some of the upfront points you paid if you pay them off by X date.

Let's say total "all-in" closing costs are $4k, and the HML will give you back $7500 if you pay them off by X date. Great, so you save $3500 plus carrying costs at that high interest rate. Or maybe you do one of the "no closing costs" refinances where you take a bumped rate -- it'll still be way better than 12% HML rate. Is it worth all that hassle to save maybe $7500? That depends entirely on how you value your time. Some people get excited about $7500, some people don't.

Can we refinanace loan when it is listed on MLS

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