What effects does having a lien on your home have on getting refinancing on your home?

Question by misymagicg: What effects does having a lien on your home have on getting refinancing on your home?
We you not be able to get a loan altogether? Or will they just minus that amount from the amount you are asking? What happens if you were pre-approved on the refinance?
I have plenty of equity in my home. This seem the only way for us to get this project done and get the appraisal too.

Best answer:

Answer by wizjp
Easy. Pay off the lien, or no loan.

They will not put a loan on record behind an open judgement. Loss of lien position in the event of a foreclosure.

To say nothing of any credit issues.

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4 Comments for “What effects does having a lien on your home have on getting refinancing on your home?”

  1. Expert Realtor

    The pre-approval is just that…PRE-approval.

    You have to meet conditions of the loan.

    One standard condition…is clear title.

    When you have a lien on your home…you don’t have a clear title.

    If you are doing a cash-out refinance…the bank will pay off the lien and take it out of the proceeds that you were asking for.

  2. jlf

    Depends. What kind of lien?

  3. David Z

    when you refi, all liens are paid off. if those are big it can prevent a refi because collateral is not enough.

  4. chatsplas

    You would have to get a large enough mortgage to pay off the lien as part of the refi, or pay it off prior.
    PReapproval is irrelevant, they hadn’t done a title search to discover that you had a lien. And it may queer the deal as it indicates a problem in your financial management.
    Cannot sell the house or refi without FIRST paying off lien.

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