refinance home with equity to pay off liens???

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My husband and I purchased a home in TX. When we purchased it, my husband had several liens that transferred over to the house. Our mortgage broker knew this beforehand, and we got into a really bad mortgage situation (we were going to ‘flip” the house, but the liens kept us from doing this). Now, we have over $ 20,000 equity in the home and we’d like to refinance it to pay off the liens. Our credit scores are in the low 700’s and we are self-employed. The lenders that will work a loan require the liens to be paid off first, and the lenders that will refinance to pay the liens deny us. Can we refinance the house to get out of the really bad mortgage and not pay off the liens? Or do we have to pay off the liens to refinance? Ideally, we’d like to pay the liens off (the equity would pay all the liens off plus some) but our ARM is set to adjust in October to an ungodly amount, and we need to refinance. Any solid suggestions would be most appreciated. Thanks for your time.
We do have a proof of income issue. Our CPA does his job a little too well. YTD we have made over $ 85K, but that doesn’t matter. We still can’t get refied. We’d like to have the liens paid off at closing. BOA, where we bank, won’t do it. Do you know of any other banks that may refi us? Thanks again for your input.

3 Comments
  1. Reply
    jen_ny6
    May 2, 2011 at 6:28 am

    Given the state of the mortgage market these days your going to have to pay off liens before any reputable mortgage broker/banker will help you to refinance. I agree that you want to refinance before your arm resets. When you do refinance go with a fixed rate loan. Good Luck.

  2. Reply
    Cindy J
    May 2, 2011 at 6:56 am

    Keep shopping. If your scores are in the 700’s there are lenders who will refi your home – Wells Fargo, BOA, etc. Keep in mind that the brokerage houses are the middle man and you will pay additional points to them. Start with the big boys… they usually have the best rates and programs. BTW: The liens would be paid at closing.

  3. Reply
    Big daddy
    May 2, 2011 at 7:06 am

    while your credit is good, and you have equity, you may be running into an employment issue. The issue here is what you are claiming on your taxes, if your writing everything off, you may have a proof of income issue. Personally, I would have advised you to pay the liens off before getting the home, this was poor advice as the broker probably thought, like everyone else, that the home would appreciate enough and paying off the liens would not be an issue. Depending on the lien type, your probably going to have one of two choices, either pay the liens prior to closing or take 401k, ira, etc and refi the whole shot. As much as I don’t like to say it, you may not have a choice, as the arm is going to adjust and the liens will stay with you for probably at least another 10-15 years, depending on tx law. Gather up the liens and see where your at and call each one to see if a settlement can be reached, hopefully they can be brought down and you can slide all of it into a refi. If you can’t, hopefully the new bill will be able to help you, but you’ll still have to deal with the lien issue

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