Tag: finance

Is a No Cost Refinance a Free Ride?

~ Rob Spinosa ~ Leave a comment

Back in the ’70’s, Edgar Winter extolled the virtues of taking a free ride.  But since that time and especially when it comes to transactions in the financial world, most of us have been conditioned to know that nothing’s ever free.

So how does this square with the concept of a “no cost” refinance?  We hear about these all the time and our clients ask for them.  How does the no-cost strategy work and can it offer real benefit in the right situation?  We cover all these timeless questions in this short, fun, rockin’ video:

Decided to take a free ride by my side?  Please give me a like or subscribe on YouTube!

It’s time to begin,

Rob Spinosa
SVP 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

HELOC or Cash Out Refinance?

HELOC-cash-out
~ Rob Spinosa ~ Leave a comment

As a teenager in the ’80’s, our dilemmas were a little simpler — should I stay or should I go? — for instance.  But today’s homeowner faces some additional complexities, especially when it comes to deciding the best way to finance a home renovation or other large purchase.

Using the equity in one’s home has always been an enticing way to cost-effectively confront large-ticket expenses, but what’s the best way to convert that equity into cash?  Should you get a home equity line of credit (a “HELOC”) or should you do a cash-out refinance?  We get this question so frequently that I created a short video to cover the basics and have a little fun with one of the most iconic punk tunes of the era:

Decided to stay?  Please give me a like or subscribe on YouTube!

Rock the Casbah!

Rob Spinosa
SVP 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

Refinancing a Jumbo Mortgage After a COVID Forbearance

~ Rob Spinosa ~ Leave a comment

Despite some recent setbacks that see COVID cases increasing, many of us are optimistic that vaccination rates will continue to go up and all of America will eventually commit to getting the worst of the virus behind us once and for all. There is no doubt that as we headed into the summer, we could feel the economy coming back on line and the country getting back to work. Sure the recovery has been uneven, but compared to the uniform bleakness of last summer, there could only be reason for hope this time around.

Not surprisingly, the progress we’re seeing in the general economy has carried over to what we’re seeing in the mortgage industry — many homeowners who took advantage of COVID forbearance and payment deferral plans are now back to work, back on their feet, seeing those arrangements draw to a close and contemplating their best options for long-term, future financing. This happens to coincide with an ongoing low rate environment, and that has opened the door to a refinance for a good percentage of owners. But wait… If a borrower has had a recent forbearance or deferral, and has a jumbo loan, can he or she even refi at all?

The answer is “Yes!” But if you have had a forbearance or deferral plan, you have a jumbo loan and you are out there researching a refinance, you are very likely going to get some conflicting information. A key thing to remember is that not all jumbo lenders are created. Because they are not required to follow the “Agency” guidelines, that is, the rulebook that governs conforming loans as dictated by Fannie Mae and Freddie Mac, jumbo mortgage lenders will have different demands for refinancing post-COVID.  Here’s what we’re seeing for the most lenient of our investors:

Repayment Plan

The homeowner must have completed the full repayment plan or made at least three consecutive timely payments (and not missed any other payments under the program).

Payment Deferral

The homeowner must have made at least three consecutive timely payments following the effective date of the deferral agreement.

Modification Trial Payment Plan

The homeowner must have completed the trial payment plan.

If you are in doubt about whether or not you will meet the requirements above, get in touch and we can figure it out — often without any credit checks or exchange of any other personal documents. From there, if a refinance looks promising, the process is IDENTICAL to the one employed by a borrower who has not gone through any sort of hardship plan. We understand the nature of these inquiries and the place from which they stem. If you need a hand with your scenario, extend yours to us today.

Wash your hands,

Rob Spinosa
SVP 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

It’s Cool to Conform in 2021

~ Rob Spinosa ~ Leave a comment

If you know me, you know that I don’t like to stick to convention.  I was the teenager who skipped college, moved to Hollywood and played rock guitar.  In my 20’s, I saved up vacation time not for sandy white beaches but instead for expeditions to the harsh mountain environs of the world’s highest peaks.  In my 30’s, I dove (literally) into the sport of triathlon — an endeavor, to quote my Aunt Marge, that would be something she’d “rather die a thousand deaths” before contemplating.  When I come to the fork in the road where straight and narrow diverges from the path less traveled, you can bet your best Yogi Berra’ism that I’m gonna take the latter.  So to write a blog post solely about the increase in conforming loan limits tests my own limits of conformity.  But for once, I am going to go along with the crowd and talk about pending changes coming to the San Francisco Bay Area, and across the state of California, in 2021.

Let’s step back for a minute and recognize that for the entire state (and country), the current conforming loan limit for a single family residence is set at $510,400.  In many of the higher cost, coastal counties of CA, we also have a “jumbo conforming,” “super conforming,” or “high-balance conforming” loan limit that exceeds this limit.  For example, here in my home county of Marin, that limit is presently set at $765,600.  Let’s look at how these will increase in 2021:

2020 Conforming Limit         2021 Conforming Limit

$510,400                                    $548,250

2020 High Balance Limit       2021 High Balance Limit          County

$765,600                                   $822,375                                      Marin

$765,600                                   $822,375                                      Alameda

$765,600                                   $822,375                                      Contra Costa

$672,750                                   $739,450                                      Monterey

$764,750                                   $816,500                                      Napa

$765,600                                   $822,375                                      San Benito

$765,600                                   $822,375                                      San Francisco

$765,600                                   $822,375                                      San Mateo

$765,600                                   $822,375                                      Santa Clara

$765,600                                   $822,375                                      Santa Cruz

$494,500                                   $550,850                                      Solano

$704,950                                   $707,250                                      Sonoma

As of the writing of this post (late November of 2020) we have already begun to implement the higher limits, so if you believe any of these increases will impact your purchase or refinance mortgage, please let me know.  I am a big fan of the higher limits because a conforming loan generally provides an easier qualification compared to a jumbo mortgage, and simply because we have higher home prices in the Bay Area should not be a reason to subject borrowers to a more burdensome loan process.  Yes, I realize that much of the country may not dance to the beat of my drummer.  But even though I don’t conform to their point of view, my idea of conforming is increasing, and that’s a step in the right direction.

We don’t get fooled again, 

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

How Do Rate Locks Work?

~ Rob Spinosa ~ Leave a comment

There is one thing in common among all of our clients.  No matter what price point, no matter what loan size, no matter good credit or bad, no matter first-time buyer or seasoned investor, all are looking for the lowest interest rate at the lowest cost.  But how does a mortgage borrower secure such terms?  A part of the home loan process is “locking an interest rate” and this process could use a bit of explanation, so as to dispel some of the myths and offer a better understanding of how things work.

What Is a Rate Lock?

You’ve done your interest rate shopping and made a decision about working with a mortgage lender/broker.  The time has come to “lock” a rate.  What does this really imply?  A rate lock is a commitment the lender makes to you to preserve a given rate for a specific period of time.  In exchange for this commitment, you, the borrower, are insulated from market risk.  Once your rate is locked, that is (barring a few exceptions) the rate you will obtain for the life of the loan.  With many lenders today, there is no cost to lock a rate, but as you’ll see below, there are implications once a lock is in place.  It is fair to say a rate lock is a commitment on both sides of the transaction, borrower and lender.

Time Is of the Essence

All rate locks exist in finite periods of time and the most common lock periods are 30 days, 45 days and 60 days.  Longer locks will commonly have higher rates or costs associated with them, and this is a function of risk.  The longer a lender commits to preserve a rate, the more the lender is exposed to underlying financial market volatility.  Think of your rate lock in the same light as a life insurance policy.  Purchasing a policy with a longer term will be more expensive because the likelihood of a claim increases for the insurer as the years go by.  

Breaking the Chains

So now that you’ve locked your rate, what happens if your lock expires, or you decide to break the lock, or rates go down?  These are all valid questions and they can all be addressed by the blanket statement that just as in life in general, breaking a commitment in finance has consequences as well.  Some lenders offer enticing “float down” policies and suggest that clients can have it both ways — both locked and floating.  There is always an offset with such approaches because behind the scenes in the mortgage secondary market, rates locks are complex hedges that involve costs and have metrics that impact a bank’s efficiency and cost of providing funds.  All lenders want to have strong “pull through” on locks, and their ability to offer future clients competitive rates depends on this.  All this said, sometimes rates do drop dramatically while a borrower is in process and there is potential for a “renegotiation,” but this is not common and any rate lock should always be perceived, first and foremost, as a “for better or worse” proposition.  Finally, transactions that run longer than their lock periods are faced with extension costs, which are best avoided.  Borrowers should know that they cannot deliberately exhaust a rate lock in the hopes of capturing a new, lower rate with the same lender.  In those cases there is often a 30-day “freeze” where a new lock would be subject to “worst case” pricing.

Locking your interest rate on a mortgage is an important decision and an important commitment.  A good lender can help you navigate the nuances of the choices before you.  Fundamentally, one locks a rate to prevent the risk that rates will go higher while in the process of purchasing or refinancing a home.  What we see, in practice, is that deliberate action tends to relieve stress and assure a better outcome.  “Floating” a rate for better is always tempting because as we agree, everyone is enticed by the idea of lower rates and lower costs.  But remember, temptation can lead to unecessary risk and risk is what a rate lock strives to address by tamping down market volatility and containing aspects of your process that you don’t control.  Understanding how a rate lock works and formulating your own plan on locking is a smart move, and we’re here to help you with it.  

Lock ’em and doc ’em,

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 Long Is a Pre-Approval Good For?

~ Rob Spinosa ~ 1 Comment

You’ve decided to make the leap and enter the real estate market as a buyer.  You’ve been looking at homes online, the temptation has become too strong and you realize it’s time to hit the street and actually start looking at properties.  Your Realtor almost immediately informs you that not only will she not participate in your search before she knows you’re pre-approved, but also that in this pandemic day and age, without a pre-approval letter no serious listing agent will even let you step foot in the home for a viewing.  And so you reach out to your preferred lender and you get pre-approved for a mortgage.  Now, how long will that preapproval be good for?

There are a few elements involved in the lifecycle of a pre-approval so let’s look at some of the ones that typically govern the validity of your profile and the day it may expire:

Credit Report

It’s safe to say that your credit report has a 90-day expiration.  Even in cases where a lender will permit 120 days, we have to assume that a purchase timeline might be 30 days.  Since it’s largely not in your control, you never want your credit report expiring while you’re in contract.  At some point between 75 and 90 days, credit expiration becomes a material factor.  Now, if the original credit pull has you with 800 FICO scores and you’ve done nothing that would jeopardize your strong credit rating, it’s highly unusual for your credit report to suddenly become an issue, but a re-pull is warranted if you think you may enter a non-contingent contract when you’re coming up on your expiration date.

Tax Filing Deadline

In 2020, the income tax filing deadline was July 15, but in most years, April 15 is the day by which you either need to file your tax returns or file an extension.  If your pre-approval did not include this year’s filing and you’ve since filed your return (including e-file), your pre-approval must be updated accordingly.

End of Year

During January and February, most of us get our W-2 forms, our 1099s, K-1s and other year-end statements of earnings.  All of these must be included in your file, so if your property search crosses the end of the year, your pre-approval would need to include the newly released information.

Life Events

If you get a new job, your hours on your current job are reduced or changed, if you get divorced, buy a new car, etc., all of these events could impact your pre-approval.  A good way to conceptualize your pre-approval would be to assume that anything that impacts your income, assets or credits could influence your mortgage application.  Let us know when these things happen and we’ll make the necessary adjustments.

Your mortgage pre-approval is always a work in progress until you go into contract.  We can make any necessary changes and advise on financial aspects in advance too.  We’re here to help and ultimately our goal is to build and maintain and strong and ready file so that you have the best chance of winning your offer.  We need your help to do that and we, in the industry, can all help by reminding you it’s not over until the keys are in your hands.

Best if used before,

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 Long Does It Take to Get Pre-Approved?

~ Rob Spinosa ~ Leave a comment

Many real estate markets in California move fast, but it’s been this way for years.  When a hot property hits, perhaps there’s a showing on Sunday (more on that in a bit, and in the context of COVID-19) and then offers are due on Tuesday, with some buyers scrambling to make a preemptive offer, if possible.

This reality can run counter to some buyers’ inclinations to get their mortgage financing in order by dipping one toe in the water at a time.  It’s not uncommon for us to get a call that starts something like this:  “My partner and I are thinking about buying a home in the next 3 to 6 months, but we’re first-time buyers and not really sure where to start.  We were told by our real estate agent that we need to get pre-approved and might have some time over the next few weeks to look into this.  Can you help us get started?”  It’s also not terribly unlikely that a house will pop up that grabs these prospects by the heartstrings.  Before we know it, there will be a successive call that goes something like this:  “OMG!  We just saw the perfect home!  Offers are due tomorrow at noon!  What do we need to do to get pre-approved right now?”

So the real question here is, how long does it take to get pre-approved for a mortgage?  Of course, the answer will vary from one borrower to the next.  Some scenarios are quite simple — both borrowers get a W-2, have funds for their down payment in one account and have squeaky clean credit.  Others are massively complex — self-employment, multiple rental properties or entities owned, RSU or other variable income, a credit hiccup in the past, etc.  But at the end of the day, the single biggest factor determine the speed in which we can “decision” a pre-approval and get a buyer into the game comes down to the borrower’s organizational skills.  In other words, if any borrower(s) can complete a thorough and accurate application, then bear down and get us complete documentation for their income, assets and credit, usually and irrespective of complexity, we are almost always able to turn a pre-approval in under 24 hours.  Often, under six hours.  Right now, due to the pandemic, you may not even be able to view a property without a pre-approval letter in hand, so we are seeing a resurgence in interest for pre-approvals on short notice.  

The process and steps for pre-approval generally follow this pattern, and there is no cost or obligation associated with making an application:

  1. We always welcome an initial call to discuss objectives and answer questions.  Call any time!
  2. Our digital mortgage application is one of the industry’s best.  You can complete this user-friendly form in 10 to 15 minutes and whenever convenient.  It is best to tackle the application from a place where you have access to your financial documents so that you can assure accuracy, but even if this is not possible, some will complete the application from their smartphones with perfectly efficient results.
  3. Upon completion of your application, you’ll be prompted to securely upload your financial documents such as paystubs, bank statements, tax returns, etc.  While you can skip this step at this phase, consistent with our theme above if you are able to provide complete documentation, we are able to return a decision with less delay.
  4. We will follow up with you to review your information and issue a pre-approval letter for your search.

If you are “in the market” and your market is in motion, timing to pre-approval should not be a concern.  Yes, if you are able to start and complete the preapproval process without urgency, that’s helpful but not necessary.  We get how the housing market works and we understand what needs to happen when an opportunity arises or materializes.  Let us know when you need our assistance!

Point and shoot,

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

Pride

~ Rob Spinosa ~ Leave a comment

My most formative years were spent in the suburban Chicago-land area.  Our subdivision was an island among sea of cornfields.  The high school from which I graduated in the late ’80’s would have won no awards for diversity.  And if, at that time, you were my age and knew your sexual orientation was anything other than straight, you probably kept it to yourself.  The three-letter slur we freely bandied about at that time to denigrate homosexuality is harsh enough now that if I hear it, I cringe. 

As fate would have it, in my late teens, I moved out to Hollywood to pursue a career in music and it didn’t take long until I was exposed to others who were lesbian, gay, bisexual, transgender and who also happened to be wonderful people.  They were my co-workers and my friends.  They were damned talented musicians and artists and in the blink of an eye, I was forced to see the world very differently.

Just over my lifetime, I can observe and marvel at the increased ability by which LGBTQ individuals are able to express their sexual orientation.  Like with other efforts to expand human rights, equality, dignity and freedom, we are far from perfect.  But we have made unmistakable progress and many minds have opened.  We have had openly gay politicians and legal gay marriage in many states, including California.  And this trend shows, thankfully and with my full support, no intention of slowing down.  I will never imply to my young son that any discrimination against race, religion, sexual orientation or other cannot be lessened and, hopefully, eradicated over the course of his lifetime.  We know when the drum beats loud enough, when the water builds so high behind the dam, no army can stop an idea whose time has come, to quote Victor Hugo.  

I am not a member of the LGBTQ community myself, but I am out and proud to support their cause.  Our doors are open and we welcome them and their partners into our business.  We can offer not only great financial products and service, but a place where they will face absolutely no discrimination or prejudice and an overabundance of due confidentiality and privacy when and where required.  While I am optimistic enough about the future in our nation and our ability to pursue and prevail with equal rights for all, I am realistic enough to know it’s not OK to be silent about these matters any longer.  

With pride,

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

Your Pandemic Guide to a Jumbo Mortgage

~ Rob Spinosa ~ Leave a comment

“Our Realtor said it’s very difficult to get a jumbo loan these days.”

“We tried to do a cash out jumbo refi on our place but our bank told us that they’re not doing those anymore.”

“We wanted to refinance our jumbo loan but by the time we did the research the rates weren’t any lower than what we have already.”

“Is it possible to refinance a jumbo loan without having to move our savings and investments to the bank who’s making the mortgage?”

“We have a 20% down payment and are looking to buy a house that requires a jumbo loan.  We had no idea that would be so difficult.  Why are banks now telling us we need more than 20% down?”

As we go into the second half of 2020, it’s unquestionably true that we’ve seen a complete reshaping of the mortgage industry due to financial turmoil wreaked by the COVID-19 pandemic.  And one of the products under most pressure has been the jumbo loan — programs that accommodate loan amounts greater than the conforming or FHA limits.  Access to this tier of credit is essential to the higher-cost coastal real estate markets as well as to larger cities with luxury markets, like Chicago.  So is the home buyer or owner looking to refinance out of luck if he or she needs a competitively-priced jumbo loan?  Fortunately, the answer is a resounding “NO!,” though some research may be required to find it.

As of June 1, 2020, here are some of the jumbo mortgage options we will permit:

  • 20% down payment purchase jumbo mortgages to $3MM.  Max purchase price is $3,750,000 in this case.
  • Cash out refinances to 70% loan-to-value (LTV).  Cash out amounts can exceed $250K.
  • Jumbo purchase and refinance mortgages that do NOT require transfer of assets to us.
  • 10% down payments on jumbo mortgage options.
  • “Rate and term” refinances to 80% LTV, up to a $3MM loan amount.

While we are not out of the pandemic woods yet, we expect that our jumbo options will continue to strengthen and expand so long as real estate sales remain robust.  While much of the country can make do with conforming loan products there are many key markets that rely on efficient and cost-effective jumbo loans.  We’re here to address that need if it applies to your scenario.

Go big and/or go home,

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

Will My Property Taxes Go Up If I Refinance?

~ Rob Spinosa ~ Leave a comment

Because the current interest rate environment is so conducive to refinancing, a concern that some have about taking action stems from confusion related to how their property taxes are determined, and specifically the question, “Will refinancing cause my property taxes to go up?”  It goes without saying that nobody wants to save money via refinance, only to see it evaporate in the form of higher real estate taxes.  But is this a real threat?  Or is it safe to assume that simply by refinancing you would not see a change in your tax basis?

Our answer must first address, well, the address — of the home, that is.  Since I’m a licensed loan officer in the state of California, working out of an office in Marin County, I’m only going to view this topic through my designer sunglasses.  In California, properties are assessed to market value when they change ownership, and change of ownership does not typically happen in a refinance.  So if you purchased a home for $500,000 in 2015, and it appraises for $650,000 in 2020 when you obtain your refinance appraisal, the county assessor is still working off your original assessed value as far as your tax basis is concerned.  Behind the scenes is a more complex calculation that has to do with changes to the ad valorem portion of your tax bill, adjusted by the lesser of a 2% annual increase OR the rate of inflation, as dictated by Proposition 13.  If you have questions about how to interpret your tax bill, give me a call or send me an e-mail any time and we’ll review it together.  But again, the incremental adjustments to the original basis prevail here and not a jump to the appraised (or market) value at the time of refi.

“But wait!” you say.  “My tax bill really did go up when I last refinanced!”

OK — let’s look at this a little closer.  We know that a refinance alone would not usually trigger a reassessment, but are there some things that could cause a fluctuation in the amount of tax you’ve been paying?  At times in the past, and especially during the downturn in 2008 through 2012, some homes were eligible for a temporary reduction in tax rate.  Those will revert back to their regular basis with rising values, though this may seem disconnected and cause one to think the property tax rate has been reassessed.  But the most common culprit is an escrow account for taxes and insurance.  Adjustments by your loan’s servicer that are required to maintain a sufficient balance might show up as increases to your PITI payment.  Both of the above examples could have coincided with your refinance and they may have changed your tax payment amount, but they would not have been a result of the refinance itself.

I realize that property taxes are a significant component of your total monthly housing payment.  After all, I pay them too!  So if you’re thinking about refinancing to get into better terms or a lower payment, and you have been reluctant to do so because you feel a mortgage lender’s appraisal and process could trigger an increase in your property tax bill, you can step back from the ledge and take a deep breath.  Refinancing, in and of itself and the vast majority of the time, does not cause your property taxes to increase in California.

Eureka!  I have found it,

Rob Spinosa
Senior Vice President of Mortgage Lending
Guaranteed Rate
415.367.5959  Cell/Text
rob.spinosa@rate.com
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