Is cash out refi possible?

aapaws · Joined: 17 Aug 2009 Posts: 1 2.02 Dollars($)

I've just joined the boards and wanted to say thanks for being here. After reading too many posts to count I can see that many members have a wealth of info to share.

DH and I own our own home. No mortgage. In our early 40's and plan on staying in home at least until retirement but probably through our golden years.

Credit scores over 800. No credit card debt. Have one car loan with approx. 25K balance. DH employed for 21 years with current employer and I have been a self employed biz owner for nearly 20.
35K in cash savings and 100K plus in various retirement accounts.

DH has a hoarding problem (for lack of a better description) and collects antique cars and tractors. Have been renting multiple storage garages for our entire marriage of 17 years. Thousands upon thousands of dollars that we will never get back. Confused

Finally decided that enough is enough and have located 11 acres with a very large pole barn on it that we would like to purchase. Due to the square footage we would have more than enough to store the "toys" and a generous amount left over to offer storage for boats/rv's, etc....the property is near a state park with water. Storage is in high demand but short supply (we can attest to that).

We can't get a loan to save our lives! In my area (central Ohio) it seems that no one is lending money for land/acreage UNLESS you plan on also getting a loan to build. Assuming that we are wanting money to "invest". In a way it IS an investment but it is an investment in ourselves!

As I mentioned previously we own our home. Value approx. $170K (taking into account current lower values). Looking to borrow 100K (80 for land and 20 to get concrete flooring and other minor items). Monthly payments would be approx $300 LESS than we have been paying in RENT for years. Seems like a no brainer to me.

Do any lending institutions offer a cash out refi with no current actual mortgage to refinance?? We also have a zero balance home equity line of credit for 20K and trying to have that converted has been useless. Will be closing it out *if * and *when* we can nail down a loan. Can fully utilize DH's employment/income to qualify so as to make things less difficult with self employment verification on my end.

chrisburns · Posted: Mon Aug 17, 2009 1:58 pm Post subject:

You should have absolutely no problem qualifying for a cash out refinance on your primary home. You can use that money to then purchase the land since you can't finance it as you have found. Interest rates are really low right now so it's a great time to lock in on a 30 year fixed if you want to do this.

Jimmymackin · Joined: 17 Aug 2009 Posts: 66 0.43 Dollars($)

You will most likely have to close out your equity loan...unless they are willing to move into second position...(I wouldn't count on it) Self-Employment income is not very difficult to verify...2 years full tax returns, YTD profit and loss statement. As long as the business is not showing a loss, you should be fine. If the business is showing a loss, you will still have to provide the information anyways becuase the lender will order your tax transcripts prior to closing, and the loss will show up (assuming you file jointly) and they will need to see the returns and proof of ownership....

Good Luck

Posted: Mon Aug 17, 2009 6:53 pm Post subject:

Thanks for the information.
No problem with closing out the home equity. Had it for a specific reason about 10 years ago and just never bothered to use it again, plus I don't care for having to pay the yearly fee! One of those things that was there in case we needed it and perhaps a bit of a comfort thing.

Proving income on the self-employment wouldn't be a problem for us however I have had more than one banker give me the "It will take longer" speech if my income was included. DH can qualify on his income so just leaving my income out of the equation would simplyfy things somewhat.

Another questoin that I forgot to mention in my original post since this is all new to me.

Utilizing one bank for the loan would consist of a close on that loan.
Then there would also be a close on the new property.
Are they done together? Am I looking at two different sets of closing costs? One on the loan and then one on the purchase? Since I am not getting a new mortage but a refi I am unsure as to what to expect. Will a check be written from the bank for the property purchase or to us and we would then handle that? What about the extra money above what the purchase price is?
Hopefully this make sense? Thanks again for any advie you can offer.

Jimmymackin · Joined: 17 Aug 2009 Posts: 66 0.43 Dollars($)

"It will take longer" is usually an indication the loan officer or broker does not want to do additional work.

The closing would not be done together...they would be done as two completely seperate transactions. You would go through the process of obtain the new loan on your primary home, once you close, 4 business days later the loan will fund and the cash from the transaction will be wired into your account.

At that point you are a cash buyer...you put the offer in, offer is accepted, sign the purchase contract, set up a closing date for all parties (typically done by the sellers attorney), your money will be deposited into an escrow account, once the land has been signed over and all the appropriate paperwork is signed to transfer the land, the money will then be transferred from the escrow account to the seller's account.....

As always whenever you are buying land/home it is important to have your own attorney involved to protect your interest.

Hope that helps!

Posted: Tue Aug 18, 2009 8:38 am Post subject:

That was very helpful, Thank you!
I was assuming that there would be two actual closings.
Now the problem lies in dealing with the bank owner.
I don't want to apply for and acquire a loan only to not have my offer accepted.
Guess I need to research further.
Perhaps make an offer and see if it is excepted and then start the refi process.
I did approach it differently this morning with a potential lender and asking up front for a cash out refi. Was pre-approved and have statement in hand.
Current rate at 5.25% (no lock in by my choosing).
I'm hoping that might head south slightly by the end of this process but realize that it could also head north. Life is a learning curve.

Jimmymackin · Joined: 17 Aug 2009 Posts: 66 0.43 Dollars($)

I wish you the best of luck, let us know how it works out!

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