Mortgage Options that Solve and Sizzle Presented by
Mortgage Options that Solve and Sizzle Presented by: Lynne A. Coverdale, MBA Salin Bank & Trust Company 1
Mortgage 101 - Programs � Mortgage Loan Programs � Conventional Fixed Hybrid ARM Conforming Jumbo � Government FHA VA USDA � Portfolio/Niche Products Doctor loan program Community Hero Program First-time homebuyer program 2
Mortgage 101 – Maximum Loan to Value – Purchase/Refinance � Purchase � Conventional - Range of 75 – 97% � Government FHA – 96. 5% - 97. 75% VA – 90% - 100% USDA 100% � Portfolio/Niche Products Doctor loan program 85 – 100% Community Hero Program 97 – 100% First-time homebuyer program 95 – 97% �Possible grant money 3
Mortgage 101 – Maximum Loan to Value – Construction Perm � Refinance � Conventional 80 – 89. 9% � Government FHA 96. 5% VA 90 – 100% USDA 100% � Portfolio/Niche Products Doctor loan program 95 – 100% Community Hero Program N/A First time home-buyer program N/A 4
Basic Mortgage Benefits � � � Consolidate Debt Lower Payment Reduce Term Save interest Tax deductions 5
Basic Mortgage Benefits - Scenario: � Client has home worth $400, 000. 00 � Owes $200, 500. 00 on current mortgage � 30 year fixed with 25 years left rate is 4. 50% ($1, 114. 71 PI) � $30, 000 credit card debt ranging � � $15, 000 in personal unsecured loan � Rates range from 6. 99 – 21. 99% (average int $324) Rate 7. 99% - ($100 per month interest) Possible Solution Refinance to include credit cards and unsecured loan � New loan $250, 700 includes mortgage, cc and personal loan � � � Term: 20 year fixed Rate: 3. 75% $1, 486. 37 PI versus $1, 538. 71 for PI mortgage and interest only for other debt Benefits � � � Consolidate Debt Lower Payment Reduce Term Save interest (See amortization schedule) Tax deductions 6
Getting Creative � Need to buy home before selling current home Swing (aka bridge) loan Piggy-back loan Niche �Doctor � Work needs to be done on home Asset- secured loan �Mortgage once work completed Personal unsecured line of credit �Post-closing Home Equity Line of Credit (HELOC) Construction permanent loan 7
Getting Creative - Continued � Put least amount down – avoid monthly mortgage insurance Piggy-back LPMI Single Premium � Seller contribution Seller pays points Seller buys out mortgage insurance 8
Getting Creative – Scenario 1 � Scenario 1: � Need to buy home before selling current home Option �Swing (aka bridge) loan Details �Current home worth $300, 000 �Owes $100, 000. 00 on current home �New home price $500, 000 �Buyers don’t want to put current home on market yet due to chaos would cause on family and showings, etc. �Need money out of current home to buy new 9
Getting Creative – Scenario 1 Continued � Scenario 1: � Need to buy home before selling current home Option �Swing (aka bridge) loan Solution �Swing loan against current home for $240, 000 (80% ltv) �Swing pays off $100, 000 loan and nets $140, 000 for down on new home �Payment on swing interest only at prime + 1% $900 estimated int. pmt. �The interest-only swing payment replaces the current mortgage payment which typically includes principal and interest and taxes and insurance �Swing loan available for 12 months �Cost $400 fee when payoff loan �Loan for new home - $400, 000 �$100, 000. 00 down payment �$40, 000 for moving expenses and other expenses and savings �No mortgage insurance 10
Getting Creative – Scenario 2 � Scenario 2: � Put least amount down, avoid mortgage insurance and jumbo loan pricing Option �Piggy-back loan Details �New home price $600, 000 �Only want to put down $30, 000 �They want to keep the majority of their assets in investments WITH YOU! 11
Getting Creative – Scenario 2 Continued � Scenario 2: � Put least amount down, avoid mortgage insurance and jumbo loan pricing Option �Piggy-back loan Solution �First mortgage for $417, 000. 00 �Fixed rate 30 year fixed 3. 75% �Principal and interest payment: $1, 931 �Home equity line of credit (2 nd mortgage) for $153, 000 �Prime + 1. 5% - interest only payments � 3. 5 + 1. 5 = $638 (varies with prime) �Recommendation to pay as though a 30 year fixed � $821. 34 PI 12
Getting Creative – Scenario 2 Continued � Scenario 2: � Put least amount down, avoid mortgage insurance and jumbo loan pricing Option �Piggy-back loan Comparison �Piggy-back loan �Total payment PI and I $2, 569 �Total payment PI and PI $2, 752 �Down payment $30, 000 �One Jumbo loan �$480, 000 loan 4. 25 30 year fixed �Payment for PI $2, 361. 31 � 20% down $120, 000 (an extra $90, 000 out of the market) 13
Getting Creative – Scenario 2 Continued � Scenario 2: � Put least amount down, avoid mortgage insurance and jumbo loan pricing Piggy Back 14
Getting Creative – Scenario 2 Continued � Scenario 2: � Put least amount down, avoid mortgage insurance and jumbo loan pricing One loan jumbo: 15
Getting Creative – Scenario 2 Continued � Scenario 2: � Put least amount down, avoid mortgage insurance and jumbo loan pricing �Benefits �Piggy-back �More tax deductibility ($23, 104 vs. $20, 243 �Check with tax advisor �Earn more money on the funds invested (the extra $90, ooo) that was not used as down payment ($450 per month est. ) �The $90, 000 not used for down payment would become $120, 440 if the investments were earning an average of 6% over the first 5 year period; $161, 176 after 10 years at 6% average �One loan versus two loans and one being a variable rate �Lower monthly payment 16
Conclusion – Resources � Helpful/Consumer Resources � Mortgage related: https: //salin. mortgagewebcenter. com/Resources/Calculators. Index https: //salin. mortgagewebcenter. com/Resources/Loan. Programs https: //salin. mortgagewebcenter. com/Resource. Ce nter/Glossary. asp https: //salin. mortgagewebcenter. com/Resources/Closing 17
Conclusion – Resources Continued � Helpful/Consumer Resources � General Consumer www. annualcreditreport. com www. optoutprescreen. com or 1 -888 -5 -optout www. donotcall. gov www. dmachoice. org www. ftc. gov/faq/consumer-protection 18
Q and A - Thank you My contact information: Lynne Coverdale Salin Bank and Trust 8455 Keystone Crossing Dr. Indianapolis, IN 46240 317 -452 -8125 – direct 317 -370 -0016 – cell l. coverdale@salin. com www. Salin. mortgagewebcenter. com 19
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