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I own a property free and clear and want to pull some cash out. The way in which I own the property free and clear is because of a pay off offered by the previous mortgage company. So I took the deal, the tax results were not that favorable but "it was an offer I couldn't refuse". But now each lender I went to says I have to wait three years before I can do any refi's, heloc or anything. Where did this law/restriction come from? I went to my credit union and they said their policy is four years. So am I stuck or what? Maybe I could say it's an investment property, which it is. Any suggestions....my credit is fair 620 - 660.

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Need more info.

I'm assuming that the 'deal you couldn't refuse' was a deal offered for some kind of debt forgiveness and they 1099'd you, obligating you to the taxes on the amount forgiven.

It's similar to when people pay an offer by a debt collector. It's recorded as Settled, but not PAID IN FULL. "Settled" is not nearly as good as Paid in Full, and it's costing you.

My question is this - Since you own the property free and clear, why can't a mortgage company do a lower LTV loan and just keep your property if you default.

I wouldn't expect any company to give you more than 15% - 20% max.  If you really need the money, maybe consider a Hard Money Loan... but ouch, they crush you with Interest and Terms.

Good Luck.

 

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47 minutes ago, RockDaddy said:

Need more info.

I'm assuming that the 'deal you couldn't refuse' was a deal offered for some kind of debt forgiveness and they 1099'd you, obligating you to the taxes on the amount forgiven.

 If you really need the money, maybe consider a Hard Money Loan... but ouch, they crush you with Interest and Terms.

 

It sounds almost like a "short sale." The only time restriction we ever faced was after a foreclosure - something like four years to get an FHA and seven for a conventional? I understand short sales to have similar restrictions, just for shorter time periods.

We did a Hard Money Loan in order to buy a place before our foreclosure "timeout" was up. As I recall, his terms were 30-35% equity in the property (which he would get on default) and an interest rate of 12-14%. Basically it was like something in between a car loan and buying a house on a credit card. (We got better terms, as we bought a house that he had recently taken back via default. As sketchy as it sounds, it was all above board and we were able to refi into an FHA the minute our foreclosure was no longer an issue.)

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