Before you List your Home, you may want to take a peek at this...

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Services for Real Estate Pros with Auto & Home & Life Insurance throughout North Carolina

There's one thing about change that seems constant, frustration.  For Mr. & Mrs. Homeowner, it can be downright mind boggling with all the changes that have occurred and probably will continue to happen in the Mortgage Financing Market.  It's hard to keep up and the only saving grace to be had is that of clear & present education, as it happens. I was inspired to write this post because of some folks that called me looking to refinance their existing mortgage.  I haven't saw this topic written about much at all and think it has to be addressed.  The following is their situation...

Sal & Vicky consolidated all of their high interest credit card debt with their mortgage a little over a year back.  In turn, this boosted their credit scores dramatically and their credit now gleams with a stellar rating.  Recently, Sal & Vicky found out that they are having another child.  This being their second child, Vicky wants to cut down her work schedule to spend time nurturing and bringing up their children.  Yet, cutting back her work schedule also entails cutting her income in half...at least temporarily.

Meanwhile, Sal stands a good chance reaping the rewards of hard work by moving up within his company and also in his pay.  Assuming that happens, it isn't likely to happen for at least 12 months and it isn't anything they want to necessarily bank on.

They are in a position where their life changes also translate to a change in their financial needs.  Less income will be coming in, same old debt going out.  While I had never worked with them before, they found my information and gave me a ring.

Initially, Sal & Vicky thought it a good idea to list & hopefully sell their home.  This way, they could downsize for the short-term and then turn around and buy another house of similiar size & price down the road.  So, they listed their home on the MLS with a REALTOR.  But then Sal did some thinking, "Why not just refinance into a program that allows for a lower payment for a bit, rather than sell our home now and buy something similiar at a later date.  Heck, we love this home!  The neighborhood is perfect!!  This would enable us to sail through our life changes and avoid moving backwards in our quest for continuous forward motion for the lives of our family."

Rather than sifting through the programs that are available for their situation, I want to get to the point of this post.  Listing your home limits your lending options if you are thinking about refinancing as well.  Let me repeat, listing your home limits your financing options.

Some Lenders require the home to be off the market for 6 months, some 12 months.  Look into your refinancing options before you list your home, if each is a consideration.

Here's why:

-  Conventional Lending Institutions have what I like to call a 'Cover Your Keister' clause.  Meaning, let's say you refinance and then go to sell your home anyway after you do.  Because of the typical costs associated with refinancing, it eats at the equity you have in your property.  That's not necessarily a bad thing because when you refinance, the idea is to put yourself in a better overall financial situation.  However, if you go ahead and sell your home shortly after you refi, you may be inclined to come back and say, "all those costs ate up my equity and now I can't get out of my house what I need too."  Hey, I have a Robin Hood mentality in this Corporate World (without the stealing thing) but I understand the mind-set.  Heck, if they give you a free cup of coffee with your refi and you spill it on yourself....well, you get the drift I hope. 

-  Let's say you put your home on the Market for $280,000 and it's on the Market for 2 weeks.  After those 2 weeks you decide to refinance instead and the appraisal comes in at $300,000!  Well, that is wonderful but let's take a look into the Lender's thoughts...."I know the Collateral we are lending against is appraised at that, and it seems a very good and accurate assessment.  Yet, that very Collateral was on the Market for 2 weeks at a lower price and didn't sell.  This doesn't give us much confidence in the Collateral we are lending against, God Forbidding something happens and you default on your Mortgage.  At that point, we are stuck with Collateral we are now unsure of in regards to its Market Worth."

Make sense?  I hope it does.  Bottom line, there are programs available to refinance your property one day after you take it off the MLS.  Those limit your options though.  So, if refinancing is even a thought in your head... talk to a Mortgage Professional before you even think about listing your property for sale.  Your options will remain open and the best route will be for the taking....

 

Jason Sardi

Mortgage Consultant

Toll Free: 1-866-262-8720 ext. 220

Locally Here in Allentown: 610-439-2166 (same extension:-)

jsardi@fcegi.com

 

Licensed with the Pennsylvania Department of Banking

 

And My Mother Loves Me... and I, her!  Happy Mother's Day Mom!!!

 

 

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Jason Sardi
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
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Sara - Bingo!  It doesn't make sense to a lot of people until you break it down into those very terms.  Thanks!

May 10, 2008 01:13 PM #16
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Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

Jason....  the problem that I hear most often is that they put their house on the market for 2 to 3 weeks, hardly any bites, then look at it as... hey, we should stay anyhow....   but that must be tough to think about this prior to listing the home. I agree, they should look at their options before listing the home... but from my experience, that is just not a thought process that takes place for many.  The try first.... and then realize that it is difficult to sell.... by then, it's to late.

....  in regards to Sara G's comment... your first statement is not really true. It's not that there are few lenders that allow you to refinance one day off the market, it's that there are few programs that allow this. So it comes down to the lenders who have these programs. And most of them have disappeared because of the current mortgage market. The one type of loan, FHA, allows you to refinance your home, even one day off the market. But two things need to happen....  it needs to be off the MLS and the borrower needs to write a letter to whom it may concern, explaining why they decided not to sell....

jeff belonger

May 10, 2008 01:29 PM #17
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Lane Bailey
Century 21 Results Realty - Suwanee, GA
Realtor & Car Guy

There are a lot of homes on the market in which the seller would be better off, and may be able to accomplish their goals more efficiently by doing a refi... but they are scared of that at least as much as of selling because of the climate (as expressed by the media).  Oddly, if those homes went off the market... it would be a better market.

May 10, 2008 03:05 PM #18
Rainmaker
337,585
Thesa Chambers
Fred Real Estate Group - Bend, OR
Principal Broker - Licensed in Oregon

what a great point - if only my clients would listen to this - there are a lot of listings out there that could be better served by a refi

May 10, 2008 03:53 PM #19
Rainmaker
100,900
Lisa Ryan
Callaway Henderson Sotheby's International Realty - Montgomery, NJ
Selling Princeton,West Windsor and Montgomery Town

Thanks Jason for the reminder.  This was one of the first things I learned from my in-house guy.  BTW~ you've got one lucky Mom!

May 10, 2008 04:01 PM #20
Rainmaker
183,897
Janet Guilbault
Platinum Home Mortgage Company - Walnut Creek, CA
San Francisco Bay Area Direct Mortgage Lender

Why Jason, what a cute picture, So much better than the last one. Sorry Jennifer, it looks like the old deer in the headlights picture bit the dust. RIP I love the new Rocky look on your face.

You bring up a good point here. I am closing a new loan, perfect in every way, except the house was recently off the market so another mortgage company turned them down. Most people don't know this.

I am very fortunate to have a lender (a good one) that does not give a hoot about the house being on the market. The E turned me on to them and in this market, it has been VERY handy to have them around.

May 11, 2008 01:48 AM #21
Rainmaker
565,685
Mike Saunders
Lanier Partners - Athens, GA

Great post!

May 11, 2008 03:11 AM #22
Rainmaker
148,768
Tom Plant
WINEormous.com - Murrieta, CA

Jason - What a wealth of food for thought there. Solid information, clearly presented. Thanks.

May 11, 2008 09:44 AM #23
Rainmaker
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Patrick Canavan
Keller Williams Realty - Yorba Linda, CA
Orange County Real Estate Voice

Hi Jason,

Excellent post.  The information is greatly appreciated.  Your Mother raised a smart one:)

May 11, 2008 10:27 AM #24
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Eleanor Thorne
Equity Resources - Cary, NC
Equity Resources 919-649-5058

We were in manditory CE last week re:  underwriting appraisals... the other thing to consider is that if you are FSBO - you are gonig to need a field review and / or one of the "nationals" to do the appraisal.  ALL is changing on 9-1 (again)

May 12, 2008 04:06 AM #25
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Jason Sardi
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
Your Agent for Life

Jeff - Well, I hope this will help to change the thought process by helping everyone understand the what's and why's of some of what is going on.  Exploring refinancing options BEFORE putting one's house on the market is a biggie.

Lane - "Oddly, if those homes went off the market... it would be a better market."  I hadn't even thought of that but you may be right.

Thesa - I'm glad you are astute enough to know this!

Lisa - Seems like you have a pretty decent in-house guy, to at least let you know.  On another note, for the most part... my Mom would agree:-)

Janet - I'd be very curious as to who that lender is?  Perhaps E & myself need to talk:-)

Lenza - Thanks.  I think it is valuable to any REALTOR, Consumer, or Mortgage Professional who may not of previously known.

Thanks Mike!

Tom - Thank you kind Sir.  Have a great week!

Patrick - Lol, I have my moments.

Eleanor - Was there ever a more important time to be on our 'A' game.  Then again, this is what we do for a living so you are damn sure we should be on our 'A' game 24/7/365.

May 12, 2008 07:20 AM #26
Rainer
50,733
Greg Knowles Santa Barbara Ca.
Fidelity National Title Group-Santa Barbara - Santa Barbara, CA

Good info Mr. Sardi, I don't know why but the new photo of you reminds me of Get Smart. Probably before your time.

May 12, 2008 10:29 AM #27
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Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

Jason...   this is for Janet....  at what rate?  That is a Fannie Mae guideline which an investor can't overturn, unless it's a portfolio program. Greenpoint had this same program, with no seasoning restrictions. But there was a slight hit to the rates. I am sure there are a few lenders out there that have this program, but it's not a true conventional loan. To me, it would be an Alt-A type of program, outside the fannie mae box. I just thought I would bring this up, because it could be misleading to some, not understanding who does what and who makes up the rules. Just my .02

jeff belonger

May 12, 2008 02:33 PM #28
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Larry Bettag
Cherry Creek Mortgage Illinois Residential Mortgage License LMB #0005759 Cherry Creek Mortgage NMLS #: 3001 - Saint Charles, IL
Vice-President of National Production

The Donald says if you default on a 100K loan, you have a problem, but if you default on a 100% loan, say 300K or so, the bank has a problem.  You could take the cash and leverage it into better things.

May 12, 2008 04:00 PM #29
Rainer
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Laura Moore Godek
Laura Moore Godek, PC - McHenry, IL

Great advice.

May 12, 2008 07:10 PM #30
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Jason Sardi
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
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Greg -  As far as my pic, yes that was before my time.  But, I am familiar:-)

Jeff - I'm very interested on some of the folks are doing this and you are right... it would fall-out of Fannie Guidelines.

Cherry Creek Mortgage - Interesting way of looking at things I suppose...

Laura - Thanks!

 

May 13, 2008 04:31 AM #31
Rainer
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Mike Norvell Sr
Morris Williams Realty - Leesburg, FL
Norvell Consulting Group

Jason, I did like the post...I agreed with your thought process... butt I really liked the Backside Tattoo lower down on the post...I showed it to my wife, and she replied that I could get one like that if I wanted...not the answer I was hoping for..tonight I am taking magic markers to bed.....

May 19, 2008 12:39 AM #32
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Jason Sardi
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
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Mike - You may want to shave that back hair if you plan on sporting that ink.  As far as the magic marker, I hope you have a comfortable couch:-)

May 19, 2008 10:48 AM #33
Rainmaker
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Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

Thanks for sharing some good information. Good post.

May 19, 2008 11:34 PM #34
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Jason Sardi
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
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Thanks Gita!

May 20, 2008 03:39 AM #35
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