Just Approved: Stars align to allow refinance

Mortgage broker: Liz Bayer.

Property type: Single-family home in Walnut Creek.

Appraised value: $985,000.

Loan amount: $726,525.

Loan type: Conventional 30-year fixed.

Rate: 3.875%.

APR: 3.900%.

Backstory: With mortgage rates improving, I sent out an email blast to my past clients suggesting that they should sign up for my Rate Watch Program.

The way this program works is that I analyze for each client whether or not it makes sense to refinance and determine at what rate we would need to drop from their current rate before it would benefit them. Then, my job is to lock that rate when the market moves favorably to achieve that goal.

I established this program after trying to reach a borrower to lock their rate, but they were too slow in responding before the market changed, and that great rate was no longer available. So in this particular case, my borrowers had bought their home in 2015 when the conventional loan limit was $625,500 and they purchased their home using a first mortgage of $625,500 and a second mortgage of $147,500.

At that time, the home value was $859,000.

So, fast forward to 2019, and the conventional loan limit was raised in 2018 to $726,525, their home value increased more than $100,000 and borrowers’ income continued to climb.

The often forgotten lender guideline is that when a second mortgage was originally used toward the initial purchase of a home, it can later be consolidated into a new first without being treated as 'cash-out,’ so the rate pricing is more favorable.

With all of the stars aligned favorably, we were able to consolidate their old first and second mortgages into one loan while...