Can I refinance a home that has a lean on it?
Friday, July 3rd, 2009 at
5:40 am
Redhead asked:
I inherited an old lake house that is in bad need of repair. It is small and it would probably only need maybe 10,000 worth of money to put it in good order. The problem is that it has a lean on it. Is there a lender out there that would give me a home improvement loan? I don’t have a dime to put into it myself but if I don’t do something with it pretty quick it is liable to be condemned and I don’t want that to happen. Anyone know what I could do?
I inherited an old lake house that is in bad need of repair. It is small and it would probably only need maybe 10,000 worth of money to put it in good order. The problem is that it has a lean on it. Is there a lender out there that would give me a home improvement loan? I don’t have a dime to put into it myself but if I don’t do something with it pretty quick it is liable to be condemned and I don’t want that to happen. Anyone know what I could do?
Tagged with: Home Improvement Loan • Money Order • Refinance
Filed under: DIY
Like this post? Subscribe to my RSS feed and get loads more!
it would have to be paid off the lean holder is in first lean position meaning if you foreclose the bank gets paid second.
I am a mortgage broker and I come across this all the time.
If there is a lien on the home, you can still refinance, but the lien must be paid off durring the refinace process. If you need $25,000 for repair and you have a lien for $5,000. Ask for $30,000 and tell your broker what the $5,000 is for and he will take care of the rest.
Even better ask your broker to pull title find out the exact amount owed and contact the holder of the lien and ask to settle for less. Most likely they will as long as they re-coup some of the lost. DO NOT tell them your are refinacing other wise they won’t strike a deal as they will know they can get the full amount.
There are lenders out there that will provide financing to you on your home with the lien. The issues for the lender would be the following:
1. Is the home currently under construction ( if so, a lot of lenders will not do it because the home is incomplete and they may feel like their interest in the property will not be marketable enough to recoup the loss, if they had to sell it).
2. What is the current market value of the home ( this must be known to determine if there is substantial amount of equity in the home to cover paying off the lien).
3. If an appraisal is done, there can be no statement what so ever that suggest to the lender that the home is in fair condition ( that is unacceptable to any lender).
Another alternative is the obtain a line of credit for home improvements. Lines of credit can be obtain through your local bank or any lending institution. However, some lines of credit may become the mortgage on the home; basically the lender may tie the line of credit to the home as a lien or a second mortgage to ensure that if the real estate is transferred; they will receive payment.