Equity used for divorce settlement allows client to keep home

“The emotional component to this transaction could not be overlooked. The spouse needed to sign paperwork to come off title without yet having received the agreedupon payoff ...”

Mortgage broker: Liz Bayer, ProMortgage.

Property type: Edwardian condo in the Inner Sunset.

Appraised value: $1.74 million.

Loan amount: $1.044 million.

Loan type: 30year fixed rate Jumbo.

Rate: 3.375%.

APR: 3.469%.

Backstory: I was approached by a longtime client whom I have helped many times over in my 16plus years as a mortgage broker.

I see many life changes with my longtime clients, from being single to getting married to having children and more.

In this particular life change, my client advised that they were going through a divorce. My client wanted to buy out the spouse to retain sole ownership of their beautiful Edwardian home in San Francisco.

There was plenty of equity in the home to draw more than $500,000 to pay off the spouse.

Fortunately, lender guidelines do NOT consider this to be a “cashout” refinance. To pay off an existing title holder is considered a “rate & term” refinance, which has better rate pricing than had this been a cashout refinance.

The emotional component to this transaction could not be overlooked. The spouse needed to sign paperwork to come off title without yet having received the agreedupon payoff, so this caused some reluctance in signing the required paperwork.

This is where the escrow company plays an important role. One of the primary responsibilities of the escrow company is to serve as a neutral party to all participants in the transaction, so they were able to assure the spouse that the payoff would happen and that the ownership would only transfer if the transaction closed.

Having this neutral party serves to reduce stress in a tough situation without costly attorneys.

Now my client is ready to move on to a new chapter.