Days Off Market & Refinancing

Q. As interest rates have become more attractive, we attempted to refinance but were told that we couldn't because our home had been listed on the market in the previous 90 days. Why is this an issue for a lender?

A. Since the rates for some loans are the best we've seen in 4 years I understand your desire to refinance. But, generally speaking, when your home is on the market or has been on the market, it's going to be difficult to get a new mortgage, at least for a certain period of time. It's typical for ex-sellers to have to wait three to 12 months after taking their homes off the market to refinance. Some lenders have a "no days-off-market policy", but they're rare.

The reason for this is that banks regard properties that have been for sale as more risky. The people looking for these refi's are usually people in trouble, most often speculators, investors and marginal players who need to take cash out of their new loans. A home that's recently on the market and didn't sell is likely to go back on the market in a short period of time: it's a signal that the borrower won't have the loan for long, and banks prefer you to hold on to your loan. Even if that*s not the case, mortgage lenders presume that if you refinance your home after a failed attempt to sell, you might still try to sell it soon, paying off the loan and thus erasing any profit the lender might have made.

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