I know the secret to finding the best mortgage advice. Listen closely, I'm about to tell you a story. It might have even happened to you. Terrance and Laurie learned this hard lesson - Don't rely on advice outside a professional's field.
One evening, Terrance and Laurie had stopped in to see me about refinancing their home. "Kate, we declared bankruptcy 6 months ago. We wiped out our debts to get a fresh start. But our roof started leaking last week and we need to refinance."
They must have seen the look on my face. "Don't worry, it will be okay, Kate! Our attorney assured us refinancing is legal following a bankruptcy."
Was their attorney's mortgage advice wrong? As far as I knew, there were no laws prohibiting a homeowner from refinancing a home after bankruptcy.
But their attorney had failed to pass on the golden rule of lending.
He who has the gold makes the rules.
In other words, since banks and mortgage companies have the money to lend, they also have the power to decide their own guidelines.
So although the attorney gave correct legal advice, it was not the best advice for getting a mortgage. Terrance and Laurie ended up borrowing from a relative to repair the leaky roof. Their new roof had to wait more than 2 years until they were qualified to refinance following their bankruptcy.
How can they advise, when they see but a part? - Benjamin Franklin, Poor Richard's Almanac, 1748
Sometimes the most dangerous advice comes from someone with partial knowledge. They know only a part, as Benjamin Franklin so aptly described.
Before I retired from mortgage lending, my clients frequently asked for tax advice. "Kate, if I sell my house, will the IRS require me to invest the profit in my next home?" "Kate, if I accept a gift from my grandparents for my downpayment, are they charged gift tax?"
In fact just yesterday, I received an email asking about mortgage interest tax deductions. I answered the email the same way I did during my 20 years of mortgage lending. "I am your source for mortgage advice but for IRS advice, consult your tax professional."
So when seeking advice, remember Benjamin Franklin. Consult a professional for advice within their specialty.
What's the best mortgage advice you've received? What's the worst? I imagine some of you even have funny stories about getting a home loan. Share your story and read what others have written.
Go now to the Mortgage Advice Forum. I can't wait to hear your story!
January 2016: The Mortgage Forgiveness Debt Relief Act Update.
September 2015: Fannie Mae and Freddie Mac Improve Loan Modifications.
Keep on the right path at A Homeowner's Survival Guide to the Intimidating Mortgage Process.
Please share Terrance and Laurie's Best Mortgage Advice with your friends. I hope you'll come back and visit often.
Aug 11, 16 10:49 AM
Aug 11, 16 10:18 AM