After reading last week’s column many people called to discuss down payments and
loan structuring for refinance transactions. The structure of refinance transactions are
similar to purchase down payments in that you need to have at least 5% equity in your home. So if you have just purchased a home and structured your loan with an 80% first and a 15% second with 5% down, you would be able to refinance .
The battle in refinancing comes with the appraised value of the property. A year ago; Congress
passed a bill that is known as HVCC.
What it did was change the way lenders and brokers work
with appraisers. It added a third layer in the middle as a mediator between
those parties. Therefore, I, as a broker, cannot have direct communication
with an appraiser about a property, whether it be a purchased or a
refinance, during the transaction. It is handled by a neutral third party
selected by the lender. When going for a refinance, many times the
value of the property is unknown which makes an appraisal necessary.
Many borrowers would prefer not to pay the $400 to $500 that an appraisal will
cost without knowing whether that value will work with the numbers
for a refinance. Therefore, it makes refinance transactions very costly
for some buyers, if they don’t get the value they had hoped for. I’ve heard in the news and through advertising that many lenders are beginning to collect more money up front before beginning a
transaction, be it for purchase or refinance. I believe that I may be the last lender out there who is not collecting anything up front. Might have to reevaluate that stance soon….
Davis Family Lending, LLC
Geoffrey is the “Frisco Mortgage Guy”!
p.s. Frisco Sunrise Rotary is promoting a 5k and 1 mile fun run/walk on March 13th. Join us at the 2nd annual Lochrann’s Paddy Dash in beautiful Frisco Square to benefit Frisco Family Service Center (FFSC). Kids 8 and under can run in the Piddy Pat 50 yard dash and you can enter your dog in the Piddy Paw where all proceed go to the Frisco Dog Park group. More than just a run, this event is intended to have something for the whole family. There will be bounce houses for the kids, a silent auction, face painting and a few surprises.