Refinancing a Land Contract? Here’s what you’ll need to know.
Refinancing your land contract will be similar to getting a new mortgage or refinancing an existing one. The process involves having your credit checked and providing proof of your earnings as well as the savings you have in your bank and other accounts. You will also have your home appraised by the lender.
If you purchased your home on a Land Contract more than 12 months prior to your mortgage application for a refinance, you will be able to use the current appraised value for borrowing purposes. What does this mean to you? You will be able to wrap the cost of refinancing your Land Contract into your new mortgage and there will be no down payment required. This will limit your out of pocket expenses to the cost of a credit report and appraisal, that’s it! All costs to close can be financed in your loan.
If you need to refinance your Land Contract before the 12 months seasoning requirement has been met, you will follow the guidelines for a purchase transaction. The original documented funds used as your down payment when you purchased will be allowable and no additional funds will be needed for your down payment. All costs to close will be your responsibility. If the seller is willing, the costs may be paid by the seller.
It may be time to refinance your land contract for the attractive low rates that are now available.