A Warning to Sellers- You Can't Refi. When Listed

We have a number of people who call who would like to refinance, however, their home is currently listed. This is a major problem in the industry. It is standard to not allow a refinance of a property that is currently listed or that has been listed in the past six months. Exceptions used to occur, but with the declining market, banks don't want to take this risk. On rare occasion, some banks will still allow a refinance if the home has not been listed for at least six months. While refinancing may make sense to the borrower to take advantage of the current rates, I encourage sellers to see this issue from the bank's point of view- all banks pay loan origination staff in one form or another- if you go directly to the bank, they pay their Retail loan officers. If you go to a broker, the banks pay the brokerage a Yield Spread Premium most of the time. The loan officers at the brokerage then get paid in one way shape or form from this money their company collects. So the bank doesn't want to pay out these fees and then have the borrower turn around and sell the home; when that happens the bank does not collect the monthly interest they were expecting to collect. In these cases, the bank actually lost money rather than made money. We all know banks are not out to lose money.

If you are considering listing but are on the fence, and you're thinking about a refinance, do it now before you list.