Mortgage News and Notes

Today I had a 30-minute informational call with a woman in the early stages of a marital separation. We went over the basics, equity buyouts, mortgage payments, and the qualifying process. At the end of the call she told me that she felt so much better knowing not only what her future mortgage payments could look like, but also that she could afford to keep the house if that is what they decide. Then she asked me how much she owed me for the call. Of course the answer was nothing at all.

 

As a mortgage originator, I am not permitted to collect an hourly fee. I only get paid if and when someone does their mortgage with me. A simple fact, but the conversation reminded me that not everyone knows that! So, I am reminding you today that I am here to help your clients with mortgage solutions for FREE, and without any obligation. 

 

Considering the fact that getting a divorce is very often an expensive process, I find that my clients appreciate that I can offer them advice based on my years of experience without charge, and that I am always happy to help.

 

Margie Hofberg, President

Residential Mortgage Center

Posted by Steven Hofberg on January 16th, 2020 9:59 AM

This month's question is one I hear often. If you have a client facing a similar scenario as part of their separation agreement, I would be happy to speak to you or your client. Please feel free to contact me.

 

Margie Hofberg, President

Residential Mortgage Center

 

I am refinancing to take my spouse off the deed and mortgage. Per our agreement, I have to give her $60,000 for her share of the equity in the marital home. My parents have offered to give me the $60,000 so that I don’t have to increase my loan amount to cover it. Can I do that and, if yes, how would it need to be structured to ensure that I can get my refinance approved?

 

Yes! If the separation agreement specifies that you need to give your spouse $60,000 as part of the refinance/equity buyout, we have to verify the source of funds for the buyout. If the funds are coming from your parents as a gift, they would have to sign a gift letter stating that there is no expectation of repayment. In other words, that it is not a loan. We would also verify that they have the money to give you, and document the transfer of the funds them to either you or the settlement agent.

Posted by Steven Hofberg on August 27th, 2019 1:44 PM

Divorce FAQ is a periodic newsletter by RMC with answers to specific questions on mortgages for separating or divorcing couples.

This month’s question is about the difference between an equity buyout and a cash-out refinance. If you have a client with similar questions, I would be happy to speak to you or your client. Please feel free to contact me.

 

Margie Hofberg, President

Residential Mortgage Center

 

 

 

What is the difference between an equity buyout and a cash-out refinance - and why does it matter?

 

An equity buyout is a refinance where all the proceeds of the new mortgage go to paying off the existing mortgage, closing costs, and money to the leaving spouse as specified in a separation agreement or court order. None of the proceeds can go to the borrower. This is very important since a cash-out refinance can be priced from one-eighth to a half of a percent higher in rate, depending on credit score and loan-to-value ratio. For this reason, structuring the separation agreement to reflect the equity buyout can be extremely helpful to the client who will be taking on a refinance.

Posted in:Divorce and tagged: DivorceFAQEquitybuyout
Posted by Steven Hofberg on May 31st, 2019 1:33 PM

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