Combining A Mortgage Loan with A Bank Loan -How The Team Approach Could Get You The Winning Scenario
We’re glad you joined us on Real Estate Mortgage Shoppe! If you are an athlete or if you love sports, you can appreciate the team strategy of setting up a winning move. In football, basketball, soccer and golf –you have to know what you want to accomplish and think one or two maneuvers ahead of where you are.
My job as a mortgage loan officer is to ask you the right questions, know the specifics on a wide range of mortgage products and be able to work with you to put together the perfect mortgage program to get you a winning scenario.
If you have questions, comments or just want to explore some financing options for your real estate purchase or refinance—anywhere in the country, please call me at (901) 482-0354 or email me at jo@192.232.195.219
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Good morning, Memphis! Top of the morning to our internet listeners around the country. You’re on Real Estate Mortgage Shoppe. I’m your host, Jo Garner, Mortgage Loan Officer. You can connect with me at www.JoGarner.com or by email jo@192.232.195.219. On twitter you can post your comments or questions at #JoGarner while we’re live May 21st, 2016. Or call the studio at (901) 535-9732 or (800) 474-9732 and talk with us on the air.
Today’s general topic is “Combining A Mortgage Loan with A Bank Loan -How The Team Approach Could Get You The Winning Scenario.” Becky Bowers, Vice-President of Private Banking at Evolve Bank and Trust will be sharing some opportunities you can plug into with special portfolio financing through bank from Jumbo loan financing, 100% Physician loans, Home Equity Lines of Credit and Investment loans. Becky and I will be comparing the bank portfolio product vs a traditional mortgage product and we will look at examples of when a combination of the bank and mortgage products might serve you best.
Becky Bowers, it is GREAT to finally have you on Real Estate Mortgage Shoppe. You and I have worked together to help countless clients over the years with you on the bank side of the deal and me on the mortgage side. We definitely have some mutual clients out there with some bragging rights on their financing.
Becky, tell our audience a little about yourself and what you do for your clients at Evolve Bank & Trust.
(Jo) Since we’re talking about some advantages of combining for financing with a bank loan and a mortgage, let’s talk about the difference between the bank and the mortgage company. The mortgage company is strictly for originating, processing, closing real estate loans and servicing those loans. Since most of the mortgage company’s loans are done under the Fannie Mae, Freddie Mac or other government programs, good mortgage loan officers use their knowledge of the various mortgage programs to help their clients get the best fit on a mortgage program for what that client wants to accomplish from a refinance or purchase loan. In the case of Evolve Bank and Trust, the bank has a separate Mortgage Division from the bank but the beauty of that relationship is that the mortgage company and the bank can work together to help the customer with a team effort if needed.
(Jo) Getting a great rate you can brag about on your real estate financing is important, but getting a good rate is only PART of getting the best deal. You need to spend a few extra minutes to consider the STRUCTURE of your real estate financing. The conventional 30 year fixed rates for the week of 5-16-16 through 5-20-16 closed the week at around 3.75% to 4%, in some cases, with no points. The 15 yr fixed rates ended up in the high 2’s to low 3’s. The fixed rate 30 yr government FHA, 100% VA and 100% USDA Rural Housing loan program rates ranged from the mid to high 3’s depending on various factors.
(Jo) As we are talking I am remembering one customer after another that you and I have given a combination mortgage loan with a bank loan. One client that comes to mind is a client who wanted to buy a home, but he was a business man and a real estate investor and didn’t want to tie up his funds with a large down payment. He wanted the flexibility of a credit line but wanted the biggest portion of the financing to be a fixed interest rate because this home is where he planned to live with his family for the long term.
The answer for him was a fixed rate mortgage for 80% of the sales price with a 2nd mortgage variable rate Home Equity Line of Credit taking the total combined-loan-to-value up to 90% with the mortgage and the Home Equity Line together. He put down only 10% and now he had a credit line as a 2nd mortgage that he could pay down and reuse again and again to fund projects with his business or he could use for a down payment or renovation money when buying rental homes. The majority of his financing on the first mortgage was fixed. The 2nd lien piggy-back loan had a variable rate but gave him lots of flexibility to reuse it like a credit card, with tax benefits for him since it was secured on his residence. Check with your CPA for your specific scenarios.
(Jo) I can think of a resident doctor who bought a house for his family last year near the hospital where he would be working. He had saved money for a down payment on a house under the FHA government program, but he was very happy when I switched him over to the bank doctor 100%l loan. He still got a great deal and did not have to pay for private mortgage insurance and could use the money he had saved for the down payment toward making some needed improvements to the house after he closed.
Becky, can you talk a little bit about the Evolve Bank and Trust 100% doctor loan and the other popular portfolio loan Evolve offers.
____2nd segment after 9:15 break: It’s time for the Look Back Memphis Trivia Contest. The Look Back Memphis Trivia Contest is brought to you by notable Memphis historian, Jimmy Ogle. Jimmy offers free historic walking tours in downtown Memphis in the spring and fall. To find out more, ask Jimmy at www.JimmyOgle.com . Our Look Back Memphis Trivia Contest is sponsored by John and Jennifer Lawhon of Lawhon Landscape (901) 754-7474 the Lawhon’s can help you plan your landscaping if you have a BIG, BIG project or a smaller project . The Lawhons are giving away a $25 gift card to the first person with the correct trivia answer. If you know the answer to the Look Back Memphis Trivia Question, call us on the air at (901) 535-9732. 800 474-9732
Garner # 82 05/20/16
Jack Robinson Gallery
Question: I was a “photographer to the stars” in the 1960s in New York City, but spent the last few years of my life in Memphis working with stained glass. Who am I?
Hint: I was born in the Mississippi Delta, began my career in New Orleans and now have a gallery in the South Main Arts District in Downtown Memphis.
Hint: I was a free-lance photographer employed by Vogue and the New York Times to perform feature photography in the volatile 1960 and 1970s.
Hint: I covered fashion, written, stage, silver screen and musicians in about every venue in New York City.
Final Hint: I spent the last year of my life doing water color and pen and pencil designs for the stained glass windows for the chapel at St. Jude Children’s Research Hospital.
Answer: Jack Robinson Gallery. Though Jack Robinson’s professional photography career spanned only 17 years they were pivotal years in modern history. Jack was there to document in fine art photography the social changes that occurred in the ’60s and early ’70s as reflected by fashion, art, the written word, the stage and silver screen, and probably most important of all, the music. Jack photographed virtually every musician that we think of when we think Woodstock and the Summer of Love.
Jack did album covers and fashion shoots. He photographed the Nixon White House, then Dennis Hopper of “Easy Rider”, the unbridled decadence of the ’60s in New York and unequaled elegance of Jacquelyn Kennedy in full formal regalia. Jack captured what is arguably the absolute zenith of modern fashion as given us by Pucci, Cardin, St. Laurent, Blass and the like. But he also showed us the casual look that was to become and sometimes what was not to become (electric clothes by Diana Dew). From the “Beat Generation”, as an insider and a participant, Jack Robinson captured on film what the world will remember for generations, as the ’60s.
Jack Robinson (1922-1997) came to Memphis in 1972 and began a new career as a painter. After his stint at Laukauff Studio he joined another glass studio where he spent the last year of his life doing water color and pen and pencil designs for the stained glass windows for the chapel at St. Jude Children’s Research Hospital where Danny Thomas is buried. He fell ill in November 1997 and went to see his doctor. Mr. Robinson died of cancer within a month of that visit. The Jack Robinson Gallery is located at 400 South Front Street and is open 10am-5pm, Monday-Friday. Robinsongallery.com and 901-576-0708.
Jimmy Ogle gives free outdoor walking tours on the sidewalks and parks in Downtown Memphis during the Spring and Autumn of each year, with the next Tuesday Tour being at Beale Street Landing at 11:45am on Tuesday, May 31; the Bridge Walk on the Memphis & Arkansas Bridge on at 2pm on Sunday, June 26; the Fairgrounds Walking Tour at 2pm on Sunday, June 19 (assemble at the Coliseum). The D’Army Bailey County Courthouse Tour (indoors): Third Thursday each month at 12:00 noon – the next being Thursday, June 16.
Go to jimmyogle.com for the 2016 Spring Season schedule and location
QUESTIONS ANSWERED BY BECKY BOWERS:
1. Let’s talk about Home Equity Loans and the advantages of using the combining your mortgage with a Home Equity Line of Credit –also known as the 80/10/10 loan program.
2. Talk about the special 100% portfolio DOCTOR LOAN program. It requires little or no down payment. No private mortgage insurance. Low fixed rate for the first 5 years then converts to an adjustable rate with safety caps. This loan is perfect for a resident doctor wanting housing to live near the Memphis, TN medical center.
3. Portfolio 5/1 Jumbo –Similar to the Doctor Loan –but it is an 80% to 90% loan depending on certain factors with a low rate fixed for the first 5 years and then converts to an adjustable rate with some good safety caps on the annual and lifetime interest rate caps. The guidelines allow borrowers to get around some of the more detailed restrictions on the regular per=
4. Many times we have been able to offer clients the Evolve Bank bridge loan to help them transition smoothly to buying their new home when the old home has not sold yet. Please talk about how the bridge loan works.
Bridge Loans – these are available to customers that have equity in the home they are selling but find a new home they would like to purchase before they can sell their current home – they can take out their equity to pay down on the new house and then have this loan for 12 months interest only to get the old house sold
5. Like the bridge loan, the construction to permanent mortgage works like the temporary bridge loan. How does a customer take advantage of the construction to permanent loan?
6. Another loan that isn’t really a real estate loan but can be used for business uses, but can also help with real estate transactions too is the investment /brokerage loan.
Investment/Brokerage account loans – also good loans for borrowers that want to use some of their cash that is currently tied up but have money in stocks, bonds, or cash value life insurance accounts. Good short term loan to borrow money to put down on a house.
7. What is the difference between a mortgage company and a bank? (Jo and Becky both answer this one)
QUESTIONS ANSWERED BY JO GARNER:
What are some factors you use to determine if your customer would do better getting the combination mortgage and bank loan or just the mortgage loan with paying private mortgage insurance?
It’s important to know what your customer’s priorities are. Are they planning to keep the house for several years? Are they risk adverse to any kind of adjustable rate or can they use the variable rate line of credit to make money on their money?
(The real estate investor short story and the business man working capital story)
If my customer wants to only put down 5% or 10% but is more comfortable with one mortgage for 90 to 95% loan-to-value, then I can get him a mortgage where he pays private mortgage insurance every month and, depending on his credit scores it could be $90 to $200 extra per month for private mortgage insurance as compared to starting out having the fixed rate first mortgage up to 80% loan-to-value and the 2 lien, variable rate piggy-back home equity line, but remember part of the reason the combo loan tends to be a lower payment than the one-loan scenario is because the home equity line portion is usually a variable rate that starts off low and it is an interest-only payment for the first part of the loan.
The beauty of using the combination 80% loan-to-value fixed rate first mortgage and the variable rate Home Equity Loan in the 2nd lien position, is that, by having the credit line, you can use it like a credit card and pay it down, and then charge it up again. In some cases, this type credit line is tax deductible if it is secured on the primary residence, Consult with your CPA for certified advice on your tax situation.
Another popular option used by mortgage companies is to structure one loan with lender paid private mortgage insurance so that the customer enjoy a low rate, not having to payment monthly private mortgage insurance and yet only has to put 5% to 10% down. On the lender paid private mortgage insurance, though, the interest rate over the entire loan amount for the entire term is higher than if they just did a regular loan and paid pmi per month or got the piggy-back loan .
Talk about what private mortgage insurance, what it does, who it benefits.
A. Private mortgage insurance does not protect the buyer. Private mortgage insurance helps the lender so the least you pay for private mortgage insurance, the better off you are. PMI required on conventional loans with an amount over 80% loan-to value. It drops off once you get to a 78% loan-to-value. You can try and get rid of it early if you contact your current lender and allow them to get an appraisal that can show your value has increased and you can now get rid of the PMI, but you have to make at least 12 to 24 months mortgage payments before attempting to get rid of the pmi.
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REAL ESTATE TIP OF THE WEEK: (Becky shares a tip about niche portfolio loan products and the bridge loan . Jo shares some ways you can use the bank and some of the mortgage products to provide down payment money to buy additional real estate properties with little or nothing down. )
ANNOUNCEMENTS: 1. Talk Shoppe offers free education and networking to anyone interested in real estate or business. This Wednesday May 25th, 2016 Talk Shoppe will be presenting “the Mastermind Principle: based on the book by Napoleon Hill, Think And Grow Rich” Talk Shoppe is free for the next 2 months thanks our supporters like Peggy Lau of World Ventures (901) 289-0747 and Chef Eric Meyers of Eat at Eric’s Grill & Catering www.eataterics.com He is down at Mud Island with his Food Truck today at the Duncan Williams-St Jude Dragon Boat Races serving up some great food and JAVA4Jobs coffee. www.Java4Jobs.com For more information about Talk Shoppe, go to www.TalkShoppe.com
2. To hear today’s podcast of the Real Estate Mortgage Shoppe and others, go to www.JoGarner.com
-3. “MAKE YOUR PLAN, WORK YOUR PLAN. IF THE DEAL WORKS FOR YOU TODAY, DO IT TODAY.”
QUOTE CORNER:
“You owe me money, but yes, tell me about your fabulously expensive weekend.” Unknown
“The best way to make someone remember you –borrow money from them.” Unknown
“Always borrow money from a pessimist; he won’t expect it back.” Unknown
Rejoiners-
David Lenoir, Shelby County Trustee (TN) http://davidlenoir.com/about-david/
Jackie Woodside, author “Calming The Chaos” Marlborough, MA. www.JackieWoodside.com
Don Hutson, author of Selling Value, Memphis, TN www.donhutson.com
BECKY BOWERS, EVOLVE BANK & TRUST
Rebecca Bowers
Vice President, Private Banking at Evolve Bank and Trust
Greater Memphis Area
Education-Lipscomb University, Bachelor of Arts, Organizational Communications
1990 – 1994
The University of Memphis- Masters, Business Administration
1994 – 1996
Honors & Awards-
2012 Power Player – Memphis Business Quarterly
2009 Distinguished Alumni Award – Bartlett Education Foundation
2008 Bartlett Area Chamber of Commerce Top Sales in Chamber Memberships
Volunteer Experience & Causes
Volunteer
HopeWorks
August 2009 – Present (6 years 10 months)Education
Volunteer as a Faith Encourager. As a Faith Encourager, we focus on supporting and encouraging the adult students as they learn new job skills and habits, finish their educational training and are challenged to live a responsible, Christ-centered life. We are assigned to a specific student and spend one lunch day per week eating and interacting with the student at HopeWorks’ facilities.
ABOUT JO GARNER-MORTGAGE LOAN OFFICER:
www.JoGarner.com (901) 482 0354 jo@192.232.195.219 twitter @jogarner
Jo’s job description: “As a mortgage loan officer, my job is to give my client the benefits they want from their financing terms—listening to my client and determine what’s of the most value to THEM– What is their comfort level on a house payment, how much are they comfortable paying down, what type of financing do they need to get the house they want to buy or refinance. Different clients have different priorities in life—some are buying their first home with very little down payment funds. Some are recovering from medical challenges, divorces or preparing to send children to college and some are embarking on a long term goal of buying properties to build rental income. Whatever their personal priorities are, my job is to put together a mortgage with comfortable terms that will help them achieve their goals.”
Jo Garner is a mortgage officer with extensive knowledge in tailoring mortgages to her customers who are refinancing or purchasing homes all over the country. She offers conventional, FHA, VA or other loan programs for refinancing and purchases.
Jo can help you look at rent vs buy, when it makes sense to refinance, how to get the best deal on your home purchase financing.
Jo Garner has been in the real estate/financing business since 1987. She got her start in Portland, Maine where she first began her real estate career. She received her real estate education from the University of Southern Maine and was personally mentored in San Diego, California by Robert G. Allen, author of Nothing Down, Creating Wealth and The Challenge.
On moving back to West Tennessee in 1987, she went into business buying and selling discounted owner-financed notes secured on real estate. In 1990 Jo went to work for a residential mortgage company and has been a mortgage loan officer for over 20 years. Her goal is to offer excellent, affordable service to her customers, tailoring the loan programs to the specific needs of her clients.
In addition to her work in the mortgage field, Jo Garner is the primary sponsor and founder of Talk Shoppe in Memphis. www.TalkShoppe.com She was also the editor of Power Shoppe, a free weekly e-zine designed for real estate professionals and others indirectly connected to the real estate industry and currently publishes on her blog www.JoGarner.com .
For real estate financing solutions, plug into Real Estate Mortgage Shoppe. You can find mortgage rates, FHA Streamline refinance with no out-of-pocket costs, and more.
SHOW NOTES & Calculations:
Credit score 740 +
Sales price $250,000
Mortgage Scenario with combo 1st and 2nd
1st mortgage $200,000 4.125% 30 year fixed rate
$969 P&I
$405 approx Memphis and Shelby Co property taxes
$ 100 approx homeowners insurance
$72/mo approx interest only HELOC
$1,546/mo
Credit score 680
Sales price $250,000
Mortgage Scenario with combo 1st and 2nd
1st mortgage $200,000 4.5% 30 year fixed rate
$1,013/mo P&I
$405 approx Memphis and Shelby Co property taxes
$ 100 approx homeowners insurance
$72/mo approx interest only HELOC
$1,590/mo
Mortgage Scenario with one loan payment pmi 90% LTV
Credit score 740+
1st mortgage $225,000 3.875% 30 yr fixed
$1,058/mo P&I
$ 405 approx taxes
$ 100/mo approx insurance
$ 77/mo approx private mortgage insurance paid until it drops off at 78 to 80% LTV
$1,640/mo
Mortgage Scenario with one loan payment pmi 90% LTV
Credit score 680
1st mortgage $225,000 4.125% 30 yr fixed
$1,090/mo P&I
$ 405 approx taxes
$ 100/mo approx insurance
$ 137/mo approx private mortgage insurance paid until it drops off at 78 to 80% LTV
$1,732/mo PITI with pmi