Happy Friday! Let me share with you this week's questions, we have some god ones. Let's see what's up...
- We bought a home to renovate and flip in 2014. We paid 500,000 for it and owe 403,000. We had it listed for over a million dollars, but the property has not yet sold. We have decided that we would like to make this house our home - we love it! We do not want any cash out, but we would like to pay off the existing commercial note on the property and put 30-year financing in place. We would like to roll our closing costs into the loan. Is this going to be a problem? Question first...did you both personally guarantee the existing loan on the property? The objective would be to view this transaction as a refinance. In order to do this, the property has to be titled to you personally or have you attached to the property through debt instrument. If this has to be viewed as a purchase then there has to be a down payment.
- I would like to buy a new home. I have a 10% down payment now, but I also have a piece of property for sale. I would like to use the proceeds to reduce my mortgage balance. How can I do this? This is called a principal curtailment. Most mortgage servicers will allow you to do this. Anytime you would like to reduce the principal by $10,000 or more, they will charge a nominal fee and do, what we term, re-cast the loan, re-amortize the loan for the remaining term. You may also may a principal reduction without re-casting. This would not change your payment but accelerate your pay off.
- How is it going with TRID? Any change can be scary - we have certainly seen a lot of it in our industry since 2007. TRID requires the loan officer to do a better job up-font in collecting documents, and closing must be aware of the calendar. All is to benefit the borrower.
Please feel free to contact me with any questions you might have. I look forward to working with you and your clients. Please remember, I am licensed in Virginia, North Carolina and Florida.