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Question Re: Refiancing

Posted on: 06th Dec, 2006 10:47 am
My question is : I\'m a home owner in Texas and I\'m pursuing refinancing on my home loan, I owe some back taxas on my property. I was told by one Lender that the taxas could probally be paid by the lender as a no cash out but then by an Underwriter that it would be considered as a cashout loan and the Texas 80% law would apply. Can you please bring some clarity to this problem for me. Thank You, Sandy of TX
in a no cash out, the refinance amount does not exceed the the current mortgage amount.

while in your situation you need to pay for the back taxes which can be paid for by the amount you receive out of the refinance. in this case it will be a cash out refinance.
Posted on: 06th Dec, 2006 10:58 am
Hi Sandraisles,

The underwriter meant to say that prior to refinancing, you need to pay back taxes (property taxes which are unpaid) and if the lender does that on your behalf, then he may roll that payment into the refinance loan. It will then become cash-out-refinance, as the amount you borrow (existing loan balance plus back taxes) will be higher than your existing debt against the home.

Do let us know if you have any more doubts.

God bless you.

Samantha
Posted on: 06th Dec, 2006 08:17 pm
Hi,

Its better that you pay your back taxes by using your own cash or by taking cash –out refinance loan. Otherwise, The IRS will place a tax lien on your property and this may be reported on your credit report. Such a negative item on credit report usually stays for 7 years.

Once the tax lien is reported, the IRS can penalize you with payment of 75%-100% of the original taxes owed along with interest charges. And, every time you apply for credit, the tax lien may create a negative impression on creditors and lenders and it may be difficult for you to get any loan.

Thanks,

Sara
Posted on: 06th Dec, 2006 09:44 pm
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