Two previous posts discussed refinancing your current mortgage and how a subordinate loan can affect that process. But there is nothing better than a real-life situation to explain how intertwined your finances are.

A recent customer had difficulty selling their house due to the current housing market. They chose to take their house off the market and remodel instead. It would be easy to refinance, right? Their thought was that with a lower mortgage payment, they would have available funds to make the upgrades in their current home.

Here’s a brief outline of what happened:

• The balance owed on their 1st mortgage was $99,000 and $26,000 was due to a different bank on a 2nd mortgage.
• They wanted to combine the two loans into a $125,000 re-finance.
• Their house only appraised at $127,500 (seven years ago, it was valued at $141,000).
• Because a different bank had the 2nd lien on the house, they had the right NOT to subordinate that loan – and chose not to – citing that the total of the loans were too close to the appraised value of the loan.

This customer was surprised, because they were never late on a payment, both hold full-time jobs and have a very good credit rating. Their hopes of remodeling disappeared. They felt all was lost, until a family member suggested they call Grandview Lending. Here’s what happened next.

• We found a lender that agreed to a re-fi, consolidating the two loans.
• Since we serve the customer, not just the mortgage, we felt they were being over-charged for their homeowners insurance, so referred them to a different insurance agent.
• The customer had closing costs, but also received a reimbursement from their escrow which resulted in little out-of-pocket expenses.
• Overall, their monthly payment was lowered by about $300.
• They chose to pay a higher amount per month, and will now be able to pay off their new loan about 7 years sooner.
• They have a new mortgage, less costly insurance, will pay their home off sooner and have completely remodeled their current home.

Of course, not all situations turn out this way. However, there are many times we can assist those who feel they have no other options. This is the benefit of working with an experienced mortgage broker. More options, more knowledge and more alternatives.