Mortgage  Question?
Can You Pay Off a Charge Off with a Cash Out Refinance?

Can I do a cash-out refinance to payoff debt that was charged off?

Harry Jensen, Trusted Mortgage Expert with 45+ Years of Experience
, Trusted Mortgage Expert with 45+ Years of Experience

As long as you have sufficient equity in your home and can qualify for the loan amount based on your credit score, debt-to-income ratio, employment history and other borrower qualification factors you should be able refinance your current mortgage and payoff the charge off. Please note that this type of mortgage is considered a cash-out refinance even though you may not receive any proceeds when you refinance because you are paying off non-mortgage debt. You can use our Cash Out Refinance Mortgage Calculator to evaluate different refinance scenarios.

Another option you may consider is to payoff the charge off over time without refinancing your current mortgage. This approach may enable you to resolve the charge off issue over a longer period of time without incurring the costs associated with refinancing your mortgage. The downside to this approach is you may need to negotiate a payoff plan with the charge off lender, who may not to agree to the plan. Additionally, because this approach takes longer to resolve the charge off, it takes more time to benefit your credit score and credit report.

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About the author

Harry Jensen, Mortgage Expert

Harry is the co-founder of FREEandCLEAR. He is a mortgage expert with over 45 years of industry experience. Over his career, Harry has closed thousands of loans for satisfied borrowers and now offers his advice and insights on FREEandCLEAR.  Harry is a licensed mortgage professional (NMLS #236752). More about Harry

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