Refi on house used for collateral

[Shawn Mcenteer]

My wife is being offered ownership to a company where she would have to use our MFR (we owner occupy, only property we own) as collateral, in return she would become a share holder. If our house is being used as collateral we are being told we will not be able to refinance. Our intention with our current property was to refinance a portion of the equity to purchase our next property. If we have to put our property up for collateral what options do we have moving forward using our properties equity to purchase future properties? Is refi possible? other options we are not thinking of?

[Jeff Bridges]

Originally posted by @Shawn Mcenteer:

My wife is being offered ownership to a company where she would have to use our MFR (we owner occupy, only property we own) as collateral, in return she would become a share holder. If our house is being used as collateral we are being told we will not be able to refinance. Our intention with our current property was to refinance a portion of the equity to purchase our next property. If we have to put our property up for collateral what options do we have moving forward using our properties equity to purchase future properties? Is refi possible? other options we are not thinking of?

 Looks like you've answered your own question that you can do either or. The entity holding the collateral determines the terms of the ownership and the liens placed on your property that result. Only that company can explain the terms to you. Collateral means the company has right to your houses equity if the business incurs liability it can't pay back. What do you stand to gain from the business over the short/ long term by putting your property up as collateral? What do you stand to gain by instead refi your property and investing in rentals instead? What risks are associated with the company that could jeapordize your property and have them take it back if company were to get in trouble? Pick the one that you stand to gain the most and have the risks most acceptable to you after talking with your financial and legal advisors.