Helping Clients Get “UnStuck”

Do you have clients that may not have the income level now they had before they retired but are STUCK in a HIGHER RATE MORTGAGE because they don’t qualify due to this lower income? Your client is frustrated, they are wasting money on interest they shouldn’t be paying and there doesn’t seem to be an answer for them. It is a fairly common situation and one that can be remedied with further examination into their case but often less experienced and skilled lenders just don’t know what to do.

Let me share this recent example where we succeeded in helping someone just like this. The client that was referred to me by a Financial Planner needed to get out of their higher rate mortgage (4.875%) and lower their monthly payment and free up cash flow. The client was experiencing medical issues and was requiring distributions from their account to handle this.

The Client only was receiving social security but had a large account (over $2m) with the advisor. Knowing about the asset account we explored using “Assets as Income” which allows us to create a qualifying income amount based on their investment holdings.

One interesting and great aspect of this method is that Fannie Mae and Freddie Mac each have their own calculations so we can go back and forth between the two where needed. Here is the basic grid which outlines the way each looks at Assets as Income.

Calculating Valuable Assets

There are two ways to calculate the income:

1. Take the ending balance from the most recent account statement and subtract out any cash to close and required reserves not covered by other assets on file.
2. If the account in question is made up primarily of investments (stocks, bonds, mutual funds), subtract 30% from the resulting balance. If the account is liquid (checking, savings, money market, etc.), then no 30% reduction will be applied to the balance. (The resulting figure is the net value that will be used for calculating the qualifying income.)

As you can see, this is a pretty straightforward way to help your clients qualify where there may not be a path to get it done in a traditional sense. These questions and strategies are why I wrote a book on this whole topic specifically for Advisors. You can download it for FREE at WWW.SANDIGEOLENDING.US/ADVISORBOOK

Let’s schedule a 30-minute Zoom call to discuss how Effectively Managing the Third Side of the Balance Sheet can lead to Protecting and Growing the Assets for your clients.