New Product Alert
Spousal
Separation Program
Yesterday I was provided some details about a new product offering from
one of my lenders. I feel this information should be shared as I
think it will add a valuable service to some who find themselves in a
situation where there are no options. It should be noted I am not
speaking of my experience with this product but of the information we were
provided yesterday. I can however speak of my experience and
knowledge of the lender offering this new product. There is only
one lender offering this as far as I know.
In recent years there have been lots of changes to the rules which affect
they types of mortgages of available. One of the biggest changes is
the reduction in the maximum loan to value allowed. For a refinance
the maximum loan to value is 80%. So, if you have a $400,000 house
the maximum you can borrow is $320,000. This ultimately affects the
ability to refinance in a situation where you are in a separation or
divorce and the amount needed exceeds 80%, which unfortunately are so
many these days.
Who is this
product for?
This product was designed for people who are separating or divorcing from
their spouse. More specifically for people who are in need of
financing in excess of 80% of the matrimonial homes value. It has
been my experience that most of these situations require financing for
enough to take over the existing mortgage, buyout the ex-spouse and to
possibly pay out debts. This product will help to do all of
these.
What is the
product for?
Basically, this product will allow one of the two ex-spouses to buy the
house from the other. Because we are arranging this new mortgage as
a purchase, the lender is allowing us to go up to 95% of a property’s
value. For example, if a property has a value of $400,000 then you
can get financing of up to $380,000, this is $60,000 more than previously
allowed. The money can then be used to pay off the existing
mortgage and the penalty, also buyout the ex-spouse and pay off
debts.
What are the
Benefits?
Ø- From 80% to
95% financing
Ø -Allows one of
the ex-spouses to keep the house
Ø -Helps avoid
the sale of the matrimonial home
Ø -Helps both
with the allocation of joint debts
Besides the arrangement of a new mortgage to release ones obligation I
think this product addresses another really big problem which is commonly
faced. It allows one to be released from the obligation of a joint debt
by rolling it in to the mortgage. Even though it is often specified
in a separation agreement that he or she is no longer responsible for a
joint debt I would say it is rare that a lender will allow that person to
come off of the debt.
What’s Next?
The first thing I will do is provide a free consultation. In that
consultation I will work with one or both to determine what options are
available. Also, I will pre-qualify one or both to make sure it is
structured in a way that is most beneficial. I know exactly how to
structure one of these mortgages so I can help walk clients throughout
the entire process. Not only will I be able to help with the
arrangement of the mortgage for the buyout of the ex-spouse but I will
also be able to determine how to go about helping the other purchase a
new house for them also. The possibilities are endless… I can
think of so many ways to help a client with this.
Please don’t hesitate to contact me if you or somebody you know is in
need of help with this type of mortgage. If you are unsure it never
hurts to contact me.
Any and all mortgage products are subject to lender and/or insurer
approval, O.A.C.
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