Hello Community, I have a question if someone has suggestions I will really appreciate it.

I have a client whom is trying sell a house he bought and completely remodeled with his own money. He is considering selling it via owner finance, however, he wants to do a cash-out refinance first. Is there a bank or lender out there that will allow him to refinance the home and subsequently owner finance it to a buyer? 

Please advise.

Thanks 

@Jhoana Olarte

Generally no.  Most lenders have a due on sale clause.  You could flip it around though.  Sell to the new borrowers.  Hold a note for the mortgage.  Get the new borrowers a loan that doesn't require seasoning on title and refinance the note getting your guy his money out.  PM me if you need more specifics.

Stephanie

Originally posted by @Jhoana Olarte :

Hello Community, I have a question if someone has suggestions I will really appreciate it.

I have a client whom is trying sell a house he bought and completely remodeled with his own money. He is considering selling it via owner finance, however, he wants to do a cash-out refinance first. Is there a bank or lender out there that will allow him to refinance the home and subsequently owner finance it to a buyer? 

Please advise.

Thanks 

It can be done. He might be able to get 80% LTV on a cash out. Generally the banks want 6 months seasoning (from the time he bought the house) but not always. He can sell it on a Wrap to a new buyer. Look for a regional bank that does portfolio lending. He will need to show income of course to support the debt payment. I can think of three different ways he can do this, but it is based on details we don't have here.

Realistically the answer to your question is no.  Its done all the time.  As subject to, lease/option, wrap or all inclusive trust deed deals.  But this is almost always a violation of the due on sale clause in the loan.

It is so much easier and cleaner if you just sell outright and let the buyer get their own loan. Seller is done with it, gets his cash back and buyer is getting a 30 year mortgage. Over and done with.