Notes

Mortgage Refinance

Definitions

FINANCE -- Getting a loan to make a Purchase

COLLATERAL-- promise/Guaranteed to payback

MORTGAGE -- A loan secured by property or real state as collateral

MORTAGE NOTE -- Promissory note stating if you don't payback they have the right to seize property
30 year Term { most common}
20 year Term
15 year Term
10 year term
{40 year term} not to common

INTEREST-- Banks profit

PRINCIPAL-- Original amount of loan

REFINANCE-- Getting a new loan to replace the old loan {loan modifications by law both refinance and loan modifications are subject to {seasoning a 6 month period} where no changes can be made to the loan }

EQUITY-- The percentage of the Home already owned by the borrower, Equity grows with payments or when the property gains value in the market

BALANCE-- Money owed by the borrower at any given time/ it is not affected by the property value

LTV-- Loan to Value {%} then percentage owed on the loan against the value of the home Value/balance/ "{zillow.com}

CREDIT SCORE-- FICO a number between 300-850 that depicts a consumer credit worthiness

FICO-- Fair isaac Corporation

640 minimum credit score

BANKRUPTCY-- A legal process involving a person or business that is unable to pay back their debts, when their income is not enough to cover debts expenses. 7 years to discharge {2 years point of discharge}

FORCLOSURE-- The Repossession of a mortgaged property when the borrower fails to keep up their monthly payments {lenders will go to great lengths to avoid foreclosure trying through various means to work with the borrower towards a feasible repayment plan

FORBEARANCE-- A pause on the mortgage payments a lender agrees not to foreclose and the borrower agrees to become current on their payments after the agreed time {3 month increments} due to hardships {PAY RIGHT AWAY} needs to have 6 months of consecutive payments

DEFERMENT-- defer/ postpone to end of the loan extending the repayment period {PAY IN LONG TERM} 3 month increments
{rebuttal for deferment Have you at least made 6 payments on time after that pause}

CASH OUT-- {service we are offering} Cash out refinance taps into the equity allowing the home owner to borrow money

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REBUTTAL

Planning to sell -- If we can show you some Great options that make financial sense would you consider keeping your home

DEFERMENT/FORBEARANCE -- ask if the have made at least 6 consecutive payments since

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TYPES OF INCOME QUALIFIED

W2 {WORKING}
10-99 {SELF EMPLOYED}
RETIREMENT/PENSION
ACTIVE MILITARY
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TYPES OF LOAN

CONVENTIONAL LOANS
more flexibility
backed by private lenders
no escrow {property tax/home owners insurance}
hard to qualify
20% + down payment
620+ credit score
ARM- Adjustable rate mortgage/ with cap
income 2 years same job 3500+ month


FHA LOANS {FEDERAL HOUSING ADMINISTRATION}
Backed by the Federal Housing Administration FHA loans allow the purchase of a home with a credit score score as low as 500 with 10% down payment or a 580 credit score with 3.5% down payment
backed by government
low credit score
low down payment {fico 500 10%/ fico 580 3.5% down payment}
mortgage insurance {0.3% to 15%} MIP
escrow {when a 3rd party handling transaction}
2 years same job industry
income $3500+ month


VA LOANS
Backed by the US DEPARTMENT OF VETERANS AFFAIRS VA LOANS are designed for select members of the military community, active duty, or retired personal who served for atleast 4 years and received honorable discharge their families may also qualify if they where named beneficiaries on the VA benefits.
backed by government
select military active duty/retired {honorable discharged, disability discharge}
Family if named beneficiary on VA benefits
Special Subsidy { no down payment, No mortgage insurance
escrow

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OBJECTIVES

LOWER INTEREST RATES [currently not available}
lower rates
lower monthly payments
Remove MIP mortgage insurance
Lower Mortgage Term { Higher payment the faster the payoff}
Cash out from their equity

CASH OUT REFINANCE
By replacing the current mortgage with a new loan that is higher than the current balance, it allows the home owner to tap into the equity on the home and withdraw the difference between the two mortagges in cash to utilize towards any financial goals they may have.

LENDERS
Iconic 90% ITV after cash out
Fed 3
Loan Depot 1,2,3
Magnolia {MAG}
PHM 600 FICO + MAX $125 K
MOON MAX $125K
FREEDOM

PROS OF A CASH OUT REFINANCE
Make Value added home improvements or repairs, Home owners may use the cash out for renovations, Kitchen, Bathrooms, and extra room, to increase the property value.
Consolidate pay off High Interest Debt, Absorbing high interest debt into the mortgage and making good use of the funds could be less expensive than personal loans or credit cards

RETURN ON INVESTMENT
Using the equity to invest on their own Business, Real state or another venue to gain a profit is a financially smart use of Cash out money

NET TANGIBLE BENEFIT TEST
Determine if the REFI will benefit the veteran

CONS OF A CASH OUT REFINANCE
Increases the interest rate, a cash out refinance may hike up the Interest rate if the rates on the market have risen homeowners, credit score has suffered or the new loan is larger than the original loan was will have a higher monthly payment
Restarting the loan the repayment on the new loan is typically being spread out over 30 years essentially restarting the loan from scratch


Cash out Refinancing and your taxes
a cash out REFI might qualify for mortgage interest tax deduction if the home owner is using the money to improve the property, {eligible projects}
adding a swimming pool or hot tub
construction a new bedroom or bathroom
erecting a fence around your home
improving Roofs protection against elements
replacing windows with storm windows
installing a central air a/c or heating system
Installing a home security system
adding solar panels


HELOC
HOME
EQUITY
LINE
OF
CREDIT