Things to Consider When Scheduling an Appraisal: Recently Listed Properties
When speaking in lending terms, a recently listed property describes a property currently listed for sale, or listed within the most recent 6 months. For most borrowers, having recently listed their property does not prevent them from completing a transaction. However, it may limit the amount of money that the borrower is allowed to borrow in some instances.
For government refinances of any kind (FHA or VA), the borrower is simply required to remove the property from the market before the loan is approved. A copy of a cancelled or expired listing agreement will need to be provided as proof. The same can be said for a conventional rate or term refinance. The loan will not be approved without proof that the listing is no longer active.
Where conventional loans differ from government loans is in the case of cash out refinances. For properties listed within the past 6 months, conventional, cash out loans are capped at 70% LTV (Loan–to-Value ratio, meaning a lender can only lend a borrower 70% of the appraised value). Keep this in mind if a property has recently been listed, as an FHA loan, which are capped at 85% LTV, may prove more beneficial if looking to maximize cash out. It is also a good idea to hold on to cancelled or expired listing agreements in the future.
Written By: Neil Daily, Underwriter at Royal United Mortgage LLC