Divorce Buyout Mortgages

I don’t think it would have surprised many married couples to learn, as they worked from home in a room that may have doubled and tripled as a dining room, nursery and rec center, that divorce filings were up 34% over the first half of 2020 and as pandemic despondency set in and influenced nearly every aspect of work, home and social life.

I would be the last one to make light of the stresses that COVID imposed on marriages and households, but instead I did see this unique time as equally opportune for shining a bright light on how divorce buyout mortgages work.  These types of transactions constitute a percentage of the refinances we do each year and particularly at such critical junctures in our clients’ lives, it’s helpful to be a source of reliable and reassuring information.  An equity buyout mortgage may enable one spouse to retain the family home and leave that part of their world intact while also allowing the spouse who is “bought out” to begin the next chapter of his or her life.

Sometimes it’s most helpful to use an example to illustrate how a divorce or equity buyout refinance might work.  Let’s say a married couple purchased a home together for $500,000 and made a down payment of 20% of the purchase price.  They jointly had $100K in equity (aka, “ownership”) and they started with a $400,000 mortgage at the time of purchase.

Fast forward to the depths of COVID and this couple decides to divorce.  By that time, they have paid the mortgage down to $380,000 and the home is appraised at $540,000.  Their equity position is now $160,000, or $80K per spouse.  In order for one spouse to buy out the other, a mortgage of $460K would be necessary ($380K + $80K).  But some things need to happen first.

In any divorce situation, it’s critical that the spouses/borrowers are working from an enforceable divorce decree.  A loose or informal separation agreement won’t work for a mortgage lender.  Without a formal separation document, a home loan originator would have additional concerns about the future disposition of assets, spousal support, etc.  Once the marital home’s status is outlined in the divorce decree, the spouse who will keep the home can work with a lender to determine how a buyout refinance needs to be structured.  Sometimes the couple will agree on a specific equalization payment and sometimes a percentage of the appraised value will dictate how much it takes to buy out the spouse who is leaving the home.  As long as the payout amount goes directly to the departing spouse, the loan is not considered a cash-out refinance, and this helps with both the rate and the maximum loan-to-value (LTV).  This is important because most often now one of the spouses will be solely carrying the housing payment and this can sometimes also be compounded by the additonal debt burden of paying spousal or child support.  Lining all of this up at the pre-approval stage and even before the decree is finalized is helpful to some.  After all, if the divorce is structured to give home to one of the spouses and that person cannot afford to support the payments, it is setting the family up for failure.

Navigating a divorce buyout scenario often requires careful planning and always benefits from clear advice.  We’re here to help at any stage of the process, understand the inherent difficulty in these situations and can work with all parties to foster a better understanding and clear a path to success.

You can go your own way,

Rob Spinosa
Senior Vice President of Mortgage Lending

Guaranteed Rate
NMLS: 22343 
Cell/Text: 415-367-5959 
rob.spinosa@rate.com

Marin Office:  324 Sir Francis Drake Blvd., San Anselmo, CA  94960

Berkeley Office:  1400 Shattuck Ave., Suite 1, Berkeley, CA  94709
 

*The views and opinions expressed on this site about work-related matters are my own, have not been reviewed or approved by Guaranteed Rate and do not necessarily represent the views and opinions of Guaranteed Rate.  In no way do I commit Guaranteed Rate to any position on any matter or issue without the express prior written consent of Guaranteed Rate’s Human Resources Department.

Guaranteed Rate. Illinois Residential Mortgage Licensee NMLS License #2611 3940 N. Ravenswood Chicago, IL 60613 – (866) 934-7283

Can I Get a Jumbo Mortgage with an H-1B Visa?

Right now, immigration is a hot topic in the United States.  Also right now, real estate is a hot market in the United States.  And also right now, at the intersection of these two, I field a lot of questions from those with H-1B visas who are looking to get a jumbo mortgage in order to buy or refinance a home.  Here are the three most common:

  1. “Can I get a jumbo mortgage if I am on an H-1B visa?”
  2. “What are the requirements for getting a jumbo mortgage if I am on an H-1B?”
  3. “Are the terms any different for a visa holder compared to a US citizen?”

Let’s look at the answers for each, but first delve into just a little bit of the technical definitions of both the H-1B visa and a jumbo mortgage.

Citizenship Status and the H-1B

In mortgage lending, we generally recognize four statuses for citizenship; US citizen, permanent resident alien (green card), non-permanent resident alien and non-resident.  In the eyes of most jumbo guidelines, US citizens and permanent resident aliens are essentially treated the same.  Non-residents, also known as foreign nationals, are generally not eligible for conventional financing, though there are loan options that exist for them which I have covered in a separate post.  The H-1B falls into the non-permanent resident alien status. 

An H-1B visa allows an individual to temporarily work in the US in a “specialty occupation.” Specialty occupations may include those in high tech, science, medicine and business/finance.  So the question remains, how does the lending industry treat an H-1B/non-permanent resident alien?

Jumbo Mortgages

One might think that a jumbo mortgage could most easily be defined by loan size — and there is some truth to this.  However, in many higher-cost areas of the US, the conforming loan limits differ.  Across most of the country, the one-unit conforming loan maximum is presently $548,250.  But here in Marin County, for example, our conforming limit is $822,375.  So yes, a jumbo loan would be anything over the conforming limit, regardless of location, but there are also some lending options that will allow a jumbo loan below the high-balance conforming loan limit ($822,375, in our example) but above $548,250. 

Therefore, “jumbo” is not exclusively tied to loan size and a better definition might go something like this:  A jumbo loan has a loan amount that is typically above the conforming loan limit and that follows the qualified mortgage (QM) requirements.  Jumbo loans are not securitized by the “agencies,” Fannie Mae and Freddie Mac.  Jumbo loans are most often underwritten to a specific investor’s guidelines and funded with that investor’s deposit base.  The investor has additional discretion over the qualifying guidelines of the loan itself and this may result in a more intensive process, additional documentation from the borrower and a more restrictive qualifying standard when compared to conforming loans.

Putting It All Together

Now that we’ve established that we have an eligible visa holder and the need for a jumbo mortgage, what will this borrower face once in the loan process?  First off, the answer is “yes” an H-1B holder can get a jumbo mortgage!  Often at the exact same terms as a citizen or green card holder. 

The key sticking points for these borrowers often tend to revolve around history.  Lenders like to see a two-year credit history (US credit, FICO scores, etc.) and a two-year tax return history.  It’s very difficult for a newly minted H-1B holder to get financing based on the historical proclivities of the lending industry, but once there is a track record, things open up substantially.  As for loan amounts, rates, and loan programs, again, so long as the history piece is met, we generally do not find there are any additional restrictions or restraints for a non-permanent resident alien.  And yes, we see these applicants all the time here in the tech-heavy Bay Area.

If you are a visa holder and have questions about a jumbo mortgage, don’t hesitate to get in touch.  Pre-approval is free and does not obligate any applicant, but before the application is completed, I am available to answer any questions you may have.

Welcome!

Rob Spinosa
Senior Vice President of Mortgage Lending

Guaranteed Rate
NMLS: 22343 
Cell/Text: 415-367-5959 
rob.spinosa@rate.com

Marin Office:  324 Sir Francis Drake Blvd., San Anselmo, CA  94960

Berkeley Office:  1400 Shattuck Ave., Suite 1, Berkeley, CA  94709
 

*The views and opinions expressed on this site about work-related matters are my own, have not been reviewed or approved by Guaranteed Rate and do not necessarily represent the views and opinions of Guaranteed Rate.  In no way do I commit Guaranteed Rate to any position on any matter or issue without the express prior written consent of Guaranteed Rate’s Human Resources Department.

Guaranteed Rate. Illinois Residential Mortgage Licensee NMLS License #2611 3940 N. Ravenswood Chicago, IL 60613 – (866) 934-7283

Buying a Home All Cash, Then Getting a Mortgage

Back in a real estate market a long time ago and in a mortgage galaxy far, far away — otherwise known as 2009/2010 — some buyers needed to purchase a home with cash, then hope to refinance after they had the keys in hand.  The reason for this?  Bad credit?  Nope.  Extinction of stated income loans?  Sorry, try again.  The reason was often that the homes were not eligible for financing — many had been ravaged by the neglect of economic downturn.  Plumbing was torn out, there were holes in the walls and a good number of the properties that came on the market through short sales, foreclosures and otherwise were just in various problematic states of disrepair.  They could not pass the appraisal test for “as is” condition, and so buyers needed either a private money (“fix and flip”) loan or cold hard cash in order to make the purchase.

In response to market conditions, a guideline provision known as “delayed purchase financing,” or “delayed purchase” or “recoup of funds” was implemented.  This allowed a homebuyer to get what was essentially a cash-out refinance shortly after buying a home with cash.  Heretofore, it had not been possible to get a cash-out loan within the first six months of ownership — sort of an industry standard also aimed at preventing fraud.  But with the volume of homes purchased “free and clear” out of necessity, the lending guidebook needed to adjust its sails to reality and create a finance option for buyers who ultimately desired to have a mortgage.  The delayed purchase finance exception became reality.

Flash forward to 2021, and many of California housing markets are demanding the benefits of delayed purchase financing for an entirely different reason — fierce competition.  Buyers today feel they are being forced to make cash offers to appear most attractive to sellers who have lots of choices.  And in a world where certainty and speed are highly desirable, cash is king.  I’m not kidding you when I say that houses worth $3MM or more routinely sell all-cash in our area.  But at the end of that luxurious day, some of those buyers still hope to put a mortgage, at today’s low rates, on the property and recoup some of their cash investment.  So how do they do it?

How Does Delayed Purchase Financing Work?

The question above can best be answered by saying that if you think of this transaction JUST LIKE a purchase money loan, you will be very near to the truth.  That is, the income, assets and credit you’d need to qualify if you were buying and financing the home traditionally still all apply if you are doing delayed financing.  But like with all things mortgage, there are  a few exceptions, potential snags and special considerations…

Down Payment

When you buy traditionally, you have a down payment and a mortgage and the two amounts added together total your purchase price.  But when you finance after purchase you’re just obtaining a mortgage and the “down payment” is already converted to equity (synonymous for “ownership”) in the home.  So remember, if you buy a home for $500,000 and you seek to use the delayed purchase finance exception, you’re not getting a loan for $500K, but probably $400K or less (this would be equivalent to an 80% loan-to-value and 20% down payment, for example).  This may seem obvious but it can get lost in the shuffle of conceptualizing the recoupment of funds.  You’re recovering what you would have otherwise financed, not the full purchase price amount.

Gift Funds

Let’s paint a common picture.  Sometimes given the competitiveness of the market, a young couple seeking to buy a home might lose out on a number of bids.  Maybe they even have 20 or 25% to put down, but still, time and again they are outbid.  Finally, their generous parents swoop in and agree to help them buy the home all-cash so that they have an edge and, lo and behold, they win this bid.  Next, our young couple goes to refinance the home with the delayed purchase finance exception and we ask from where the funds to purchase came.  “Oh, that was a gift from our parents…”  Well, now we have an issue because technically gifts have no expectation of repayment.  So in structuring the acquisition, it’s important that our buyers understand the implications of source of funds, particularly when it comes to gifts, and how to otherwise structure their purchase so they can recoup via mortgage financing later.  Get in touch if you have this scenario yourself.

Reserves

Another potential asset hiccup occurs when delayed financing coincides with a jumbo loan amount.  As we’ve discussed in prior blogs, jumbo loans require asset reserves.  If a cash buyer delves too deep into his savings to buy a home with cash, he may come up short on the assets that were earmarked for meeting the reserve requirement.  The funds are no longer liquid assets, but instead equity in real estate and cannot be considered as reserves.  What’s happened here is that this buyer’s assets have been reclassified as equity.

Rate Differences?

Some scenarios and lenders will price out a delayed purchase differently than a traditional purchase.  Usually where this happens, the rate on the delayed purchase would be higher.  That’s because these lenders will view these transactions like a cash-out refinance instead of a “purchase money” loan.  And in the realm of lending, a cash-out refinance is perceived as riskier and thus it comes with a higher rate.

It’s important to begin with the end in mind when contemplating delayed purchase financing.  Yes, it’s a great way to get a jump on making a competitive offer on a home, but adding the mortgage later is not exactly the same as adding it at the time of purchase.  Because of this, discussing with a mortgage professional how the end loan will look before making the leap into an all-cash purchase is the best strategy.  The good news is that you can still pre-approve for the loan in advance of your purchase.  If you feel that a cash offer is going to be what’s required to prevail in your market, getting a pre-approval for a delayed finance mortgage is exactly what you should do. 

Don’t delay,

Rob Spinosa
Vice President of Mortgage Lending

Guaranteed Rate
NMLS: 22343 
Cell/Text: 415-367-5959 
rob.spinosa@rate.com

Marin Office:  324 Sir Francis Drake Blvd., San Anselmo, CA  94960

Berkeley Office:  1400 Shattuck Ave., Suite 1, Berkeley, CA  94709
 

*The views and opinions expressed on this site about work-related matters are my own, have not been reviewed or approved by Guaranteed Rate and do not necessarily represent the views and opinions of Guaranteed Rate.  In no way do I commit Guaranteed Rate to any position on any matter or issue without the express prior written consent of Guaranteed Rate’s Human Resources Department.

Guaranteed Rate. Illinois Residential Mortgage Licensee NMLS License #2611 3940 N. Ravenswood Chicago, IL 60613 – (866) 934-7283

Asian American Support Goes Viral

Often, getting the first words down are the hardest. “Writer’s block.”  But not this time. 

So let me start by condemning the recent incident of gun violence against Asian Americans in Atlanta.  Let me take the opportunity to communicate to all Americans of all races that discrimination, in all forms, is wrong and will not be tolerated.  Not in my business, not in my community, not in the private confines of my home.  

Specifically with violence against Asian Americans, statistics show an increase in verbal and physical assaults since the onset of COVID-19. So the next time you get a chance to talk about the pandemic — anywhere with anyone — don’t call it, or allow it to be called, the China virus or the Wuhan flu.  Not because there isn’t a kernel of truth in its place of origin, but because we can readily call it COVID and everyone will still know exactly what we mean. 

Call it COVID because then your language, intentional or otherwise, won’t hit anyone’s ear offensively and won’t stand even a remote chance of being indiscriminately harmful.  I know, you’ve heard prominent individuals and certain news media personalities offer cover for making a cultural issue of the virus. But let’s accept xenophobic smalltalk for what it is — a license for someone bolder, coarser, and perhaps even legitimately sinister to push the boundary of another’s rights just that much further in the wrong direction.

We can debate the forensic anatomy of the Atlanta crime and whether anyone’s words in particular led to this shooter’s behavior.  Due process should be allowed to run its course in due time — also an American right.  But it is indisputable, today, that our individual responsibility to upholding the dignity of all Americans, through actions big and small, contributes to a more just, peaceful and inclusive society.  

In my profession, required continuing education reinforces the laws aimed at preventing discrimination in housing; ECOA, FHA, FCRA, etc. Not only were these created with good intention, they were created to address bad practice.  It’s essential that we live their values each day because, even through the language we use with our prospects and clients, we have the profound ability to affect the lives of others in very real ways.  For decades, access to home ownership has been denied to otherwise worthy Americans exclusively on the basis of race, sexuality, marital status or other classifications.  Rest assured the discrimination was not always blatant, and certainly at least some of it happened in the presence of good people who didn’t or couldn’t prevent it.  In solidarity with my Asian American neighbors, I feel compelled to say, “Not any more and not on my watch.”

Still, it must be accepted that tackling overt discrimination and preventing acts of violence that shock the conscience cannot be expected to fall within any single individual’s control.  It takes villages to do that.  So to all of us, in our unique positions as members of diverse and straddling communities; home, school, race, church, sport, neighborhood, sexual orientation, hobby and interest, I understand it’s become increasingly difficult in a culture of high-velocity information exchange to remain outside of range on the core issues of who we are as a nation.  Regardless, I encourage you speak up.  Let’s commit to begin with the manner in which we communicate, the words we choose and our effort to have those words heard by those around us.

As a grandchild of Italian immigrants myself, I support and welcome the Asian American community — I always have.  But the days of doing so silently are over.  Our doors are open and they will always find in me a supporter of their equal rights as individuals and a restless champion for their pursuit of happiness here in the United States.

E pluribus unum, 

Robert J. Spinosa
Vice President of Mortgage Lending

Guaranteed Rate
NMLS: 22343 
Cell/Text: 415-367-5959 
rob.spinosa@rate.com

Marin Office:  324 Sir Francis Drake Blvd., San Anselmo, CA  94960

Berkeley Office:  1400 Shattuck Ave., Suite 1, Berkeley, CA  94709
 

*The views and opinions expressed on this site about work-related matters are my own, have not been reviewed or approved by Guaranteed Rate and do not necessarily represent the views and opinions of Guaranteed Rate.  In no way do I commit Guaranteed Rate to any position on any matter or issue without the express prior written consent of Guaranteed Rate’s Human Resources Department.

Guaranteed Rate. Illinois Residential Mortgage Licensee NMLS License #2611 3940 N. Ravenswood Chicago, IL 60613 – (866) 934-7283

Marin County Vote by Mail Ballot Drop-Off Locations

This election cycle, there has been much disinformation propagated about voting by mail, and in an effort to help fellow community members arrive at the truth, I am providing below the drop-off locations as an additional way to submit your ballot prior to November 3. To receive an absentee ballot, you must have first registered online. Once you’ve received and completed your ballot you can mail it back or drop it off. At any time, if you need help or additional information, you can access it at www.marinvotes.org.

San Rafael

  • Albert J. Boro Community Center, 50 Canal Street, San Rafael, 94901 
  • Civic Center, 3501 Civic Center Drive, San Rafael, 94903
  • Marin Health and Wellness Campus, 3240 Kerner Blvd., San Rafael, 94901
  • Whistlestop, 930 Tamalpais Ave., San Rafael, 94901

Corte Madera

  • Corte Madera Recreation Center, 498 Tamalpais Drive, Corte Madera, 94925

Fairfax

  • Fairfax Town Hall, 142 Bolinas Road, Fairfax, 94930

Novato

  • Novato Library, 1720 Novato Blvd., Novato, 94947

San Anselmo

  • San Anselmo Town Hall, 525 San Anselmo Ave., San Anselmo, 94960

Sausalito/Marin City

  • Marin City Library, 146 Donahue St., Sausalito, 94965

Bolinas

  • Bolinas Community Center, 14 Wharf Road, Bolinas, 94924

Point Reyes

  • West Marin Health and Human Services Center, 1 Sixth St., Point Reyes, 94956

About Fraud

The nonpartisan Brennan Center for Justice conducted a meticulous review of elections that had been investigated for voter fraud and found “miniscule incident rates of ineligible individuals fraudulently casting ballots” — no more than 0.0025 percent.

Up until this point, I never thought a service I might provide to our clients moving into the county might be providing information about how to cast a ballot. But with all that’s at stake this time — and every time really — I’m leaving nothing to chance.  Whether by mail, by drop-off at the locations above, or in person, make sure your voice is heard and your vote is counted.  

Get out the vote,

Rob Spinosa

Vice President of Mortgage Lending

Guaranteed Rate

NMLS: 22343 

Cell/Text: 415-367-5959 

rob.spinosa@rate.com

Marin Office: 324 Sir Francis Drake Blvd., San Anselmo, CA 94960

Berkeley Office: 1400 Shattuck Ave., Suite 1, Berkeley, CA 94709

*The views and opinions expressed on this site about work-related matters are my own, have not been reviewed or approved by Guaranteed Rate and do not necessarily represent the views and opinions of Guaranteed Rate. In no way do I commit Guaranteed Rate to any position on any matter or issue without the express prior written consent of Guaranteed Rate’s Human Resources Department.

Guaranteed Rate. Illinois Residential Mortgage Licensee NMLS License #2611 3940 N. Ravenswood Chicago, IL 60613 – (866) 934-7283

1984

Look, I realize I should be so lucky to think that someone from the Van Halen camp is going to bust me on a copyright infringement for using the image above.  So if they come a calling, this is what I would tell them:

I originally wrote this blog post on the 34th anniversary of the release of Van Halen’s 1984 “album.”  I was a dark-skinned, plenty-awkward eighth-grader settling in for a long Illinois winter.  With no discernible basketball talent, no academic prowess and eliciting zero interest from the cute, middle-America girls who hailed from the Arrowhead subdivision and peopled the halls of our junior high, the basement my Dad built out for us threatened to be a pain cave of epic boredom proportions for at least the foreseeable future.  That is, were it not for the crackle of the phonograph needle that succumbed to the majestic OBX polyphonic synthesizer swells of “1984.”  Like watching sunrise over the Earth from outer space, that short, haunting prelude to the massive hit “Jump,” would give way to the dawn of a different day for me.  

Most of us have a favorite “album,” and again I use this word in quotes because the format for delivering music has evolved so drastically over the years.  We can likely all name at least one collection of tunes that formed the audio backdrop for a trajectory change in our lives.  Even hearing just a snippet can hearken back to a summer on the beach, an old flame, or the very essence of our youth.

Coming of age for most of us is a painful metamorphosis cocooned somewhere in the silk of our teenage years.  But for me, the strains of 1984 literally reached out of my boombox and put an electric guitar in my hands.  Then, having summarily equipped me for my calling, those nine songs transformed me, for the very first time, into an autodidact and demonstrated that a dream is meant to be pursued with innocent, if infinitely energized, abandon.  No matter how crazy and audacious the goal, when you smell like teen spirit and have little to lose, it’s your once-in-a-lifetime opportunity to give it all you’ve got.  You may not end up emulating your hero note for note, but that matters a lot less than the amount of growth you’ll experience for strumming along — with enthusiasm, with passion and with purpose. 

Thanks to a career I now love in the mortgage business, I meet a lot of people.  As introductions go, I’ll get an occasional, “Are you from California?”  “Why no…,” I will answer, and often they’ll next ask how I found myself in beautiful Marin County, just north of San Francisco.  “Well, in the late ’80’s, I moved to L.A. to pursue a career as a rock guitar player, like Eddie Van Halen….”  Pause…..  “What???”

Since the album came out, I listen to the 1984 intro every year on my birthday.  First it was on vinyl, then cassette, then CD, then my shuffle and now just my phone.  Regardless, it re-centers me with a time and place that are gone, but with an optimism that will never die.  I would be willing to bet that most of us have a musical bond to that very pivotal moment in our lives when we became much of who we would be for the rest of our lives.  What’s yours?

Might as well jump!

Rob Spinosa
Vice President of Mortgage Lending

Guaranteed Rate
NMLS: 22343 
Cell/Text: 415-367-5959 
rob.spinosa@rate.com

Marin Office:  324 Sir Francis Drake Blvd., San Anselmo, CA  94960

Berkeley Office:  1400 Shattuck Ave., Suite 1, Berkeley, CA  94709
 

*The views and opinions expressed on this site about work-related matters are my own, have not been reviewed or approved by Guaranteed Rate and do not necessarily represent the views and opinions of Guaranteed Rate.  In no way do I commit Guaranteed Rate to any position on any matter or issue without the express prior written consent of Guaranteed Rate’s Human Resources Department.

Guaranteed Rate. Illinois Residential Mortgage Licensee NMLS License #2611 3940 N. Ravenswood Chicago, IL 60613 – (866) 934-7283

What Are Credit Tradelines?

I think I’ve made it clear before that I find no shame in talking about how hard we work for our clients. My assistant, Jamie, and I see a good number of mortgage applications come across our desks every week and in 2019 and 2020, a high percentage of them have been for jumbo home loans, which means that our borrowers must demonstrate strong credit depth by way of an adequate number of tradelines on their credit report. Gone are the days when one could just have a decent FICO score in order to cross credit concerns off of the loan approval list.

When we talk about credit tradelines and credit depth, most of the prominent jumbo mortgage banks like to see recent credit activity (that is, use of credit and timely payment) to consider any account active. And that’s really what a “tradeline” is — an account. An individual tradeline might be a mortgage, an auto or student loan or a credit card. All are different types of “trades” but in the case of revolving debts like credit cards, use of those cards in the last year or two is what really brings the tradelines into active status and works to meet the jumbo lender’s requirements.  By far, the gold standard for jumbo credit is three active tradelines with activity in the last twelve months, per borrower.

So in that spirit, I’m going to let you all in on a secret for getting a great jumbo loan if you are thinking that a mortgage application may be in your future in the coming months. Here are three GREAT ideas for taking that seldom-used credit card lurking in the back of your wallet or purse, or that forlorn department store card that you forget you had, and turning it into a bona fide active tradeline which, in turn, makes you eligible for the widest selection of jumbo loan programs.

1) The Starbucks Triple Mocha Frappuccino (Venti): $4.95

This frosty beverage will set you back both 500 calories and 500 centavos — but don’t you dare pinch pennies to pay this time. Instead I want you to reach for the least-used credit card in your quiver and rack this hefty charge on that piece of plastic. By doing so, you’ll bring this credit card to “active status” within the last 12 months and you’ll be on your way to both cardiac arrest and credit qualification.

2) Nashua Tape 1.89 in. x 120 yd. 300 Heavy-Duty Duct Tape (2-Pack): $10.88

Race fans! Hot rodders! Weekend warriors! Remember when you bought your house and your mother-in-law gave you a $100 gift card to Home Depot? Remember when you used it all plus another $400 on that initial visit and they convinced you to open a store card, take advantage of the discount and then pay the rest off later? Remember too that you haven’t used the card since that day twelve years ago? Well, now’s the time to repair everything in the house with duct tape. We already knew of its all-purpose abilities, so you’re burnin’ daylight, pardner. Get crackin’ on those DIY projects and the ‘honey do’ list and pick up a two-pack just in case.

3) The Warren Plaid Boxer: Now $15.00

One other thing that we know is that if someone is going to have a collection account on his credit report, and it’s going to be of the variety of which he’s unaware, it’s either going to be a medical bill or a Banana Republic store card (close third to a cell phone bill never received). I’m not sure why this is, but people go bananas over Banana’s billing. So let me help you save your credit shorts and get into a clean, fresh pair of undies while at the same time giving you an excuse to A) actually locate your Banana Republic card, B) place an order on it before they call you to tell you it’s been inactive since Marky Mark made skivvies the shizzle and, C) bring your store card to active status in the eyes of Equifax, Experian and Transunion.

My point(s) above are simple.  Active credit tradelines are a critical component to getting a great jumbo loan, but you can’t create them after you’ve applied for a mortgage. When we pull your credit report as part of the pre-approval process we’re looking at both credit history and recent activity but the time to address both is BEFORE you’re in the mortgage process. Or while you’re saving for your down payment. Or while you’re waiting for more inventory to hit the market, etc. Bringing your unused tradelines to active status is a little step you can take that will pay a big dividend later — opening up the widest array of jumbo options and, as a result, giving you access to the most competitive rates.  Let me know if you have questions about this aspect of getting a jumbo loan and I’ll be happy to help you craft a road map to success and hey, I might even let you in on a few more bargains as well…

Venti triple mocha frap for Ron,

Rob Spinosa
Vice President of Mortgage Lending

Guaranteed Rate
NMLS: 22343 
Cell/Text: 415-367-5959 
rob.spinosa@rate.com

Marin Office:  324 Sir Francis Drake Blvd., San Anselmo, CA  94960

Berkeley Office:  1400 Shattuck Ave., Suite 1, Berkeley, CA  94709
 

*The views and opinions expressed on this site about work-related matters are my own, have not been reviewed or approved by Guaranteed Rate and do not necessarily represent the views and opinions of Guaranteed Rate.  In no way do I commit Guaranteed Rate to any position on any matter or issue without the express prior written consent of Guaranteed Rate’s Human Resources Department.

Guaranteed Rate. Illinois Residential Mortgage Licensee NMLS License #2611 3940 N. Ravenswood Chicago, IL 60613 – (866) 934-7283

Can I Refinance a Mortgage on a COVID Forbearance Plan?

Back at the end of the first quarter of 2020, the president might still have wanted to downplay COVID, but many real American homeowners suddenly found themselves in dire financial straits and quickly took advantage of the forbearance plans offered by the servicers of their mortgages.  This payment relief allowed them to navigate the most uncertain and immediate impacts of the pandemic and for some, provided a bridge to re-employment and/or firmer financial footing.  Now that some of these borrowers have made readjustments to the new normal, they may wish to take advantage of the historic low interest rates that have stemmed largely from the Federal Reserve’s response to this same pandemic.  So can a borrower refinance if there has been a forbearance or deferral on the current loan?  Let’s examine the options available today if the borrower has a conforming/conventional loan.  Jumbo loans and government loans (FHA and VA) behave differently and I’ll cover those in a separate post.  But here’s what we need to know today:

  • If you are or were in forbearance with no missed payments, then we must verify that all payments were made to terms of the agreement AND the payoff of the existing loan cannot include any funds due. 
  • If you were in forbearance, had missed payment but brought them current prior to making your refinance application, then we just need verification that your mortgage is current and no funds due to complete any reinstatement are included in the loan’s payoff.
  • If you were in forbearance, had missed payments and brought them current after making your refinance application, then we need verification that your mortgage is now current and we need to source the funds used to bring the loan to that status.
  • If you have a plan for payment deferral then you must provide a copy of the agreement issued by your servicer and you must have made at least 3 consecutive payments following the effective date of the deferral agreement.  The payoff of the loan can, in this case, be used to satisfy the full amount of the mortgage, including the payments deferred.

The low rate environment that exists today is unprecedented, a lot like the adjustments we’re all being required to make as we confront our new reality.  If you’ve taken advantage of the forbearance or deferral agreements available to you, and have adhered to the terms, there’s a good chance you can refinance your conforming or high-balance conforming mortgage today at historic low rates.  You’d be incorrect to assume otherwise.  Get in touch if you think we can help. 

Mask it or casket,

Rob Spinosa
Vice President of Mortgage Lending

Guaranteed Rate
NMLS: 22343 
Cell/Text: 415-367-5959 
rob.spinosa@rate.com

Marin Office:  324 Sir Francis Drake Blvd., San Anselmo, CA  94960

Berkeley Office:  1400 Shattuck Ave., Suite 1, Berkeley, CA  94709
 

*The views and opinions expressed on this site about work-related matters are my own, have not been reviewed or approved by Guaranteed Rate and do not necessarily represent the views and opinions of Guaranteed Rate.  In no way do I commit Guaranteed Rate to any position on any matter or issue without the express prior written consent of Guaranteed Rate’s Human Resources Department.

Guaranteed Rate. Illinois Residential Mortgage Licensee NMLS License #2611 3940 N. Ravenswood Chicago, IL 60613 – (866) 934-7283

Should I Keep Making My Mortgage Payment?

With so many people refinancing these days, and with the loan process sometimes crossing one or two months’ time, a question we frequently get from those in process is, “Should I keep making my mortgage payment?”  The answer is a simple and clear, “Yes!”  

But let’s talk about why, because the concept is as simple as it is often misunderstood.  In our formative financial years, many of us rented a home or apartment before we made the leap into home ownership.  And I’d be willing to be bet that more than a few of us got chased by a landlord about the rent being a few too many days late past first of the month.  Herein lies the mortgage payment dilemma when it comes to refinancing.  Unlike rent payments, which are due on the first of the month and cover the month ahead, mortgage payments are applied in arrears.  This means that you live in the house in August, for example, and you pay for that time (in interest and principal) on September 1.

Now let’s assume you’re refinancing a home and your expected close of escrow is the 10th of August.  Let’s also assume that you have not made the mortgage payment on the first of August.  Your mortgage has a grace period until the 15th of the month, after which you are assessed a 5% penalty.  But back to our closing scenario — the payoff demand on your existing loan, once received by escrow, will include all of the days of interest for July, plus the expected days of interest in August until the close date of the transaction.  Your new lender will collect prepaid interest from August 10 through August 31.  You will “skip” a September 1 payment altogether (no regular payment with either old or new servicer) and your first payment with the new loan will be due on October 1.  Got it?  OK, great.  But remember, on August 1 and into August AND until escrow closes, you are still responsible for your August payment!  If for some reason you don’t close on the 10th and there are delays past the 15th (where you’d incur a penalty) and, heaven forbid, delays past the end of the month where you’d report late to the credit bureaus, the responsibility to have made the August payment falls squarely on you.  

The best advice any of us can give on any mortgage transaction is to ALWAYS make your payment if you are unsure of how things will work out or if your lender or closing agent is not responsive or clear on the matter.  Until your new loan is funded and closed, you are ALWAYS responsible for making your mortgage payment and the risk of going 30 days late on your home loan is a risk too great to run.  Any overpayment, as painful as it might be, is far less damaging than the credit blemish of a missed payment.  If you have questions on any scenario, get in touch and we’ll be happy to explain further. 

The check is in the mail,

Rob Spinosa
Vice President of Mortgage Lending

Guaranteed Rate
NMLS: 22343 
Cell/Text: 415-367-5959 
rob.spinosa@rate.com

Marin Office:  324 Sir Francis Drake Blvd., San Anselmo, CA  94960

Berkeley Office:  1400 Shattuck Ave., Suite 1, Berkeley, CA  94709
 

*The views and opinions expressed on this site about work-related matters are my own, have not been reviewed or approved by Guaranteed Rate and do not necessarily represent the views and opinions of Guaranteed Rate.  In no way do I commit Guaranteed Rate to any position on any matter or issue without the express prior written consent of Guaranteed Rate’s Human Resources Department.

Guaranteed Rate. Illinois Residential Mortgage Licensee NMLS License #2611 3940 N. Ravenswood Chicago, IL 60613 – (866) 934-7283

How To Win a Real Estate Bidding War

What’s the one thing you can do to make your offer to buy a home stand out?  What’s the secret sauce, the magic bullet, the key to success?  

If you answered, “There isn’t one,” you’re pretty close.  Truth is, I haven’t found any singular aspect of any offer that assures success.  All-cash offers, zero-contingency offers, overbid offers, offers with colorful “love letters,” etc., none of them provide any guarantees to the hopeful buyer.  But there is one thing I’ve noticed that does increase the odds dramatically — stacking advantages.  

More often than not, we observe that the winning bid is a combination of the right price, the right terms and the right people.  The weight given to each will vary, but these three elements seem to be common ingredients in the proverbial taking of the cake.  Ideally, you can exert a great degree of control over these aspects:  You can offer the price you want.  You can set the terms as they fit your situation and you can choose your Realtor and lender.  You have every reason to be optimistic.

The Price Is Right

I once had a seasoned Realtor tell me, “it’s often about price, but rarely exclusively about price.”  This is good advice and it’s also why financed buyers are sometimes surprised to learn they beat a competing cash offer.  Perhaps the “sure thing” its assurances of a fast close were not compelling enough to entice to the seller to forego the higher price you may have offered, sometimes because you were using financing.  So determining when to bid under, over or right at list price matters and it’s a foundation for the rest of the offer you’ll build.

The Terms-inator

Having the right terms on your offer helps appeal to the seller’s confidence level (or lack of it) in you, the buyer.  Your terms also speak to the seller’s preferred timing and need to control a sequence of events.  One might assume that a fast close is always the ticket here, but…not so fast.  Some sellers actually need more time to close and recognizing their key thresholds will help you craft the terms you’ll state for releasing your inspection, appraisal and financing contingencies, as well as the timing of the close.

Not Everyday People

If you’re ever so bored that you need to kill an afternoon, look up how many real estate licenses have been issued in your area.  Next, look up how many of those active licensees transact one or less purchase or sale per year.  My point here is that you have a choice of your real estate representation and choosing wisely makes a big difference in your success ratio, even before you set foot in an agent’s car.  Locating a Realtor who knows the market intimately, has current negotiation experience and who garners respect in the community provides an edge perhaps greater than all the others.  Of course, choosing your lender wisely matters too, and in many areas where competition is fierce, we have learned firsthand that the listing agent will accept or not accept a buyer’s offer based on who is providing the financing.  If the listing agent knows a lender can be reached as needed and has been accountable to them and their colleagues in the past, your offer takes on new meaning.

Hundreds and hundreds of transactions have given me a window into what it takes for buyers to succeed when they place an offer on a home they wish to buy.  The results of that perspective confirm that it’s rarely any single aspect of their offer that has the ability to seal a deal, but instead the right combination of factors.  By “stacking advantages,” including offering a compelling price, setting the most appealing terms and using strong professionals on their team, a buyer’s odds increase exponentially.  And the best part about all of this?  Buyers control each block in that stack — so use great care!

Timber!

Rob Spinosa
Vice President of Mortgage Lending

Guaranteed Rate
NMLS: 22343 
Cell/Text: 415-367-5959 
rob.spinosa@rate.com

Marin Office:  324 Sir Francis Drake Blvd., San Anselmo, CA  94960

Berkeley Office:  1400 Shattuck Ave., Suite 1, Berkeley, CA  94709
 

*The views and opinions expressed on this site about work-related matters are my own, have not been reviewed or approved by Guaranteed Rate and do not necessarily represent the views and opinions of Guaranteed Rate.  In no way do I commit Guaranteed Rate to any position on any matter or issue without the express prior written consent of Guaranteed Rate’s Human Resources Department.

Guaranteed Rate. Illinois Residential Mortgage Licensee NMLS License #2611 3940 N. Ravenswood Chicago, IL 60613 – (866) 934-7283