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If I buy a home with a loan from a friend, how long do I have to wait before I can refinance?

I can't close the loan with a regular lender within time period of the purchase agreement. A friend will give me money (80% purchase price) to pay the seller with a lien on the property. I'm putting 20% cash down myself. I was told by the lender that I was working with, that I have to wait 6 months before I can start refinancing through a regular mortgage co. Is this true?
  • October 04 2012 - Bellevue
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Answers (6)

Hi , As long as you have a clear title and deed of trust, we can refinance it right away.  We are a local company so I am familiar with Washington law.  Please see my profile.  Thanks
  • October 18 2012
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The advice I gave you earlier is even more applicable if you are committed to repay your friend in 7 months. The pre qualification process will cost you a credit report fee and would be absolutely foolish for you to commit to paying back probably $200K or more not knowing you can do it. The value of the property comes into play also, as amount used for new mortgage could be based on new appraisal or sales price whichever is lower.
If you go forward at least ask your friend what happens if you need to extend pay off 5 months or more.
  • October 06 2012
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what state are you located in?

  • October 05 2012
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I have to pay my friend back within 7 months or sooner.
  • October 05 2012
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Before you commit to when you can pay your friend back, contact a lender in your area and discuss pre approval process. 6 months is likely the min. and could be longer, but you need to know that whatever the timetable that you can qualify for a refinance. Your 20% equity could be in danger if you can't pay off lien as required, and friend (or their heirs) would not be obligated to extend the maturity date of the recorded note/lien.
  • October 05 2012
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It depends, what state is the property in?  Are you looking to pay your friend back ASAP?
  • October 05 2012
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