What Happens When You Flip-Flop On Your Home's Listing?

Mortgage and Lending with Guaranteed Rate, Marin County, CA NMLS: 22343

What Happens When You Flip-Flop On Your Home's Listing?


Oh how we love to skewer our politicians for their changes of heart and mind:


"I was for the Iraq war before I was against it." 




"Read my lips.  No new taxes." 


Or, better still:


"You're going to have such great health care, at a fraction of the cost, and it will be so easy."


So once your raucous laughter dies down, let's think about what happens when a homeowner lists a house for sale, then, for whatever reason, changes his mind and takes the property "off the market?"  We'll assume this owner contemplates two scenarios from there:


  1. Since I've decided not to sell, I'm going to refinance my mortgage into terms that are now more suitable to my long-term needs.  For example, getting out of that ARM and into a fixed rate loan.
  2. Since I've decided not to sell, I'm going to take some cash out of the property and remodel it so that it suits our needs going forward.


Both of these scenarios are going to need to be approached slightly differently because once the home is appraised  for any such refinance, the appraiser is going to check this box on the appraisal form:



Now once this appraisal report hits an underwriter's desk, two distinct approaches will be taken depending on the nature of the refinance.  In our first case above, where the borrower is replacing just the existing loan and seeking new terms that better align with staying in the home, we have a "rate and term" refinance (R/T).  Usually in a R/T, we have no problem with the listing being off the market for even one day.  Yes, we'll need a copy of the canceled listing agreement and probably a letter of explanation (LOE) from the borrower stating the reasons why things transpired the way they did.


But in our second scenario, things might not be quite that expedient.  This would be considered a cash-out (C/O) refi.  In fact, most of our investors will require that the borrower waits three to six months before being able to take cash out of the home or they may restrict the maximum loan-to-value (LTV) during that initial window of time.  Clearly the signal that the lender receives when a homeowner lists a home is that the stay in the home could be short.  If a lender is going to pay out equity and possibly not service the loan for very long, it could end up being too financially risky.  So, the guideline is meant to re-establish some sense of permanence of the residence and an intent to stay put for at least a year or more.


Let's face it, people change their minds.  We're only human.  But when this happens with a home listed for sale, know that re-entry to the refinance market might have some strings attached and perhaps even that annoying tie between the toes.  If I can help make things fit more comfortably, get in touch any time.


Life's a beach, 



Robert J. Spinosa
Executive Loan Advisor
NMLS: 22343 
Cell/Text: 415-367-5959 Fax: 415-366-1590
rspinosa@rpm-mtg.com    www.rpm-mtg.com/rspinosa 
1058 Redwood Highway, Frontage Road, Mill Valley, CA 94941


LendUSA, LLC dba RPM Mortgage NMLS #1938   Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act. 


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Pat Starnes-Front Gate Realty
Front Gate Real Estate - Brandon, MS
601-991-2900 Office; 601-278-4513 Cell

Robert, interesting scenario, and one that as a Realtor we rarely encounter. It's good to know that if a seller changes his mind and then wants to refinance, lending guidelines could create a pause.

Sep 08, 2017 07:21 AM #1
Dick Greenberg
New Paradigm Partners LLC - Fort Collins, CO
Northern Colorado Residential Real Estate

Hi Rob - We have had clients that found that one out the hard way on a cash out, but I was unaware it could be done at all. Thanks for the clarification!

Sep 08, 2017 02:46 PM #2
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

Great post, Rob Spinosa ... as many Sellers would not be aware of this issue prior to the time they take action with a Lender.  The information you share could be very beneficial to anyone considering this action ...



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Sep 09, 2017 09:25 AM #3
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Rob Spinosa

Vice President of Mortgage Lending, Marin County
Can I Get a Jumbo Loan with 10% Down?
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