SMART EQUITY™ REFINANCE LOAN
I’m in foreclosure and/or bankruptcy. Can I still refinance?
Yes! The SMART EQUITY™ Refinance Loan is one of the few home loans that let you refinance out of a foreclosure or bankruptcy. If you are currently in bankruptcy, a court approval, dismissal, or discharge is required to complete your new loan.
I have bad credit and very low retirement income. Can I still refinance?
Refinancing is still possible with bad credit and limited income, but a satisfactory explanation regarding bad credit may be required. A LESA tax and insurance set aside with your new loan can overcome almost any income or credit scenario.
LESA, what is it and why do I need it?
LESA is a Life Expectancy Set Aside option for future property taxes and insurance.
An example: If, based on current lender actuarial tables, you’re expected to live another 10 years and your taxes and insurance are $3,000/year, an amount of $30,000 ($3,000/year x 10 years) would be set aside for future tax and insurance payments.
LESA allows borrowers to qualify with almost any income or credit scenario!
What happens to my home and loan when I move out or pass away?
Once all borrowers move out or pass away, the heirs will need to refinance or sell the home within 6 months. Short-term hospital stays or rehabilitation stays do not start the 6-month clock. The estate will never owe more than the home’s market value, nor will there be any recourse to the estate (heirs) for any shortage.
What if I want to sell or refinance my home?
You would simply need to pay off your SMART EQUITY™ Refinance Loan plus any accrued interest and fees.
How much does the refinance loan cost?
The cost of refinancing will be detailed in your refinance proposal package. Almost all costs can be included into your new loan. This includes insurance that protects you and your estate from ever owing more than your home is worth.
What can I do if I don’t have sufficient equity to qualify for this loan?
You can pay down the balance(s) of your home loan(s), get a gift from relatives or possibly borrow against their home’s equity, or sell your home and use the remaining equity for a SMART EQUITY™ Purchase Loan to buy a new home. This will allow you to increase the buying power of your next home by about 50%, and still have no mortgage payments. For example, you could sell your home and get the sales proceeds. You could then borrow more money with a SMART EQUITY™ Purchase Loan, and buy your next home, with no required mortgage payments on your new home. Moreover, in California, Propositions 60 and 90 may allow homeowners aged 55+ to take their lower property tax basis to their new home. Check out our information on the SMART EQUITY Purchase Loan option, below.
My children/heirs are concerned about losing their inheritance with this loan.
If your property goes to foreclosure auction, you’d lose most of your equity and they’d lose their inheritance. However, if you refinance with a SMART EQUITY™ Refinance Loan just your existing mortgage balance, you’ll still have the same amount of equity in your home as you do now, you’ll be out of foreclosure, and they’ll keep their inheritance as long as the refinanced loan monthly interest payments are made. With a larger SMART EQUITY™ Refinance Loan, you could use the extra money from your equity for cash-out, to establish a credit line, or to create a LESA allocation. Ultimately, it’s your home, your equity, and your decision as to what you’d like to do with it. If your heirs better understand the options available to you under this loan program, it can help them better understand your choice. They can be part of the counseling session, they can review the options through our website, or we can set up a conference call to answer their concerns.
Can my spouse stay in the home if I move to an assisted living facility or pass away?
Yes. Nothing changes for a surviving spouse who was approved with your refinance loan. They can continue to remain in the home with no required mortgage payments for their remaining life even if you are no longer there.
Can the new lender foreclose on my home?
No, as long as you reside in the home as your primary residence, maintain the home and keep the property tax and insurance payments current, the lender cannot foreclose. It doesn’t matter if your home value goes up or down.