Refinancing a Mortgage Following the Death of a Family Member
Experienced mortgage brokers know their job extends beyond transacting mortgage loans. The true value of using a mortgage broker is their vast knowledge of product available, providing their clients with good advice and the right solutions. Keeping in touch with your clients at regular intervals ensures you are ready to offer good advice as their lives change.
In this other blog post, we spoke about refinancing during separation and divorce. We acknowledge that life change is often associated with hardship or stress. You have an opportunity to step in and take the worry off your clients by ensuring them that you have their best interests in mind during this time. Today, we are going to discuss refinancing after the loss of a loved one or family member.
Knowing when it’s time to refinance a mortgage after losing a loved one
The impacts of such a life event are unpredictable and sometimes sudden without preparation. It also could be quite costly due to inability to work or health care costs. Sometimes there’s life insurance coverage and sometimes there’s not. Sometimes the living kin is simply left with outstanding debt that needs to be resolved.
At Bridgewater Bank our experts underwrite using common sense. This is particularly important under these sad circumstances because often we see an isolated period of atypical credit use or income earning. We listen to your client’s story and we work extra hard for these types of clients to make sure that the roof over their head is the least of their worries.
In the most ideal circumstances, refinancing should save your client money month over month by paying off high interest debts or prove to be the most cost effective way to access the funds that they need.
Sometimes refinancing makes sense and sometimes it doesn’t. Here’s a few things to consider when helping your clients:
- How much does it save the client at the end of the day?
- Do they need to remove someone off a title like a parent, co-signer or spouse?
- Is there a penalty involved?
- How much are the legal fees / lender processing fees / appraisal fees?
As a trusted mortgage broker, this is a chance for you to help someone rebuild after a personal loss. So, while these situations aren’t easy to deal with, you can make a difference in someone’s life by helping them navigate through these difficult times.
Below are two examples of when it makes sense to refinance after loss of a loved one.
Scenario One
LTV: 50%
Beacon Score: 553
GDS/TDS: 30% / 31%
Denise recently went through a traumatic life event when she lost her husband unexpectedly. Before her husband passed, their credit was being paid as agreed upon. But since his sudden death Denise has had to pay for a funeral and continue to pay the bills while his affairs are resolved. A subsequent account being written off impacted the beacon score. Denise has incurred high interest debt and it continues to accumulate.
Denise and her husband had lived at the property for over 25 years. The mortgage is 50% paid off and the home has increased in value over the years by almost $100,000. Refinancing for debt consolidation will help cover her big one-time expenses and avoid paying high interest as she rebuilds after loss. Refinancing will save Denise over $200 a month, making this the right advice for her.
Scenario Two
LTV: 76%
Beacon Score: 688 / 588
GDS/TDS: 27% / 28%
Jonathan and Maggie are a married couple who reside in the Lower Mainland in British Columbia. Tragically, Jonathan lost his mother due to cancer after prolonged illness. Over the past year, Jonathan and Maggie have had to make multiple international trips to see his mother to help take care of her. They have maxed out their credit cards and are paying high interest rates. They recently got advice from a friend suggesting that refinancing could help them get a fresh start.
Their home is well maintained, as well both Maggie and Jonathan have respectable credit scores. They are both employed full-time and have been with their same employers for multiple years. Due to all of these factors, they are great candidates for debt refinancing. Their monthly debt reduction from refinancing will save them over a $1000 dollars per month.
Related: 4 Worthy Reasons to Refinance the Home
Refinancing isn’t right for everyone. There are some costs associated with refinancing that your clients should fully understand. Sometimes the math makes sense and sometimes it unfortunately doesn’t. Our business development managers and underwriters are deal packaging experts and are ready to discuss refinancing to help you get your deals done.