“I also remember reading/hearing that a refi can turn a primary purchase into a recourse loan, any truth to that?”

In CA this is true, although there is legislation pending to possibly change that for no-cash-out refi’s.

If you currently have 20% equity and can refinance, I would not worry about this issue, though.

“I also remember reading/hearing that a refi can turn a primary purchase into a recourse loan, any truth to that?”

In CA this is true, although there is legislation pending to possibly change that for no-cash-out refi’s.

If you currently have 20% equity and can refinance, I would not worry about this issue, though.

While it is true that refinancing a purchase money loan (the loan you took out when you bought your home) recharacterizes it as a recourse loan, if you only have one loan you really dont need to worry about it even if you do a cash out refi. CA is a one action state so your lender gets one bite of the apple-they can pursue you for the deficiency through a costly/lengthly judicial foreclosure process and let you keep the house or they can foreclose. It would be very unusual for them to do anything other than foreclose. The real issue of recourse occurs on a sold-out junior lien which is a 2nd, 3rd etc mortgage that gets $0 after a foreclosure. This is one of the biggest reasons to pursue a short sale as you can get something for the 2nd thereby reducing the deficiency but more importantly negotiate with your lender to settle for some amount in exchange for them releasing you from the deficiency.

Disclaimer: I am not an attorney and even though I know this to be true in general, you situation may be different so its best to consult one if you are in this postiion.

While it is true that refinancing a purchase money loan (the loan you took out when you bought your home) recharacterizes it as a recourse loan, if you only have one loan you really dont need to worry about it even if you do a cash out refi. CA is a one action state so your lender gets one bite of the apple-they can pursue you for the deficiency through a costly/lengthly judicial foreclosure process and let you keep the house or they can foreclose. It would be very unusual for them to do anything other than foreclose. The real issue of recourse occurs on a sold-out junior lien which is a 2nd, 3rd etc mortgage that gets $0 after a foreclosure. This is one of the biggest reasons to pursue a short sale as you can get something for the 2nd thereby reducing the deficiency but more importantly negotiate with your lender to settle for some amount in exchange for them releasing you from the deficiency.

Disclaimer: I am not an attorney and even though I know this to be true in general, you situation may be different so its best to consult one if you are in this postiion.

While it is true that refinancing a purchase money loan (the loan you took out when you bought your home) recharacterizes it as a recourse loan, if you only have one loan you really dont need to worry about it even if you do a cash out refi. CA is a one action state so your lender gets one bite of the apple-they can pursue you for the deficiency through a costly/lengthly judicial foreclosure process and let you keep the house or they can foreclose. It would be very unusual for them to do anything other than foreclose. The real issue of recourse occurs on a sold-out junior lien which is a 2nd, 3rd etc mortgage that gets $0 after a foreclosure. This is one of the biggest reasons to pursue a short sale as you can get something for the 2nd thereby reducing the deficiency but more importantly negotiate with your lender to settle for some amount in exchange for them releasing you from the deficiency.

Disclaimer: I am not an attorney and even though I know this to be true in general, you situation may be different so its best to consult one if you are in this postiion.

Hi Threadkiller,

I think you may want to put more info in before these experts will chime in:

1. How many more years do you have to pay your current.

2. Current principal amount = ?

3. What rate do you think you want to refinance?

4. Do you refinance thru bank or broker?

Hi Threadkiller,

I think you may want to put more info in before these experts will chime in:

1. How many more years do you have to pay your current.

2. Current principal amount = ?

3. What rate do you think you want to refinance?

4. Do you refinance thru bank or broker?