Refinancing Home Loan
Life is never quite as simple as it sometimes seems to be. And, in financial matters, you can double that in spades.
Question: A couple of months ago, I read about the opportunity for individuals to refinance their homes to benefit from the lower interest rates prevailing. The criterion for refinancing without qualifying was that the individual could not pull any cash out of his equity, but could only refinance the loan balance.
I have recently become divorced and do not feel that I could qualify for a new loan, but would like to know if you are aware of such a loan, and what financial institutions handle these transactions.
Answer: Yes, what you heard is basically true with many lenders. But, there’s a big “if” hanging over the whole thing. With FHA, for instance, refinancing without taking any cash out of the deal--which the agency calls “streamlining” and doesn’t even require a new appraisal--is relatively painless and, sure enough, doesn’t entail new qualifying.
But, even if your home has an FHA mortgage--and certainly if the mortgage is held by a conventional lender, such as a savings and loan association--you’ve got a problem. And that problem, unfortunately, is tucked away in the fact that your marital status has changed since you (apparently) bought the house.
Now then: In whose name is the house recorded? If it’s entirely in your name, my friends in the S&L; business tell me, then you might be home free with little paper work and, possibly, without requalifying, if you have at least a 30% equity in the home.
But the mere fact that your status has changed since the house was bought, industry sources say, makes it a lead-pipe cinch that nine out of 10 conventional lenders--whether you take any cash out, or not--are going to insist on a new refinancing application from scratch. The house has gone from two borrowers to one, although any alimony you may be receiving can be lumped in as income for requalifying purposes.
Q: I purchased undeveloped real estate in 1976 and 1983--the first piece was 1.31 acres and the second was 2.47 acres. Each is located on a major boulevard and corner. The county plot map shows No. 1 as .96 acres and No. 2 as 1.38 acres.
I recently filed for zoning for development of the property and all papers showed 1.31 acres and 2.47 acres. Yet I was told that I would have to sign over, for future road use, the difference--which amounts to .35 acres on No. 1 and 1.09 acres on No. 2. This deprives me of 1.44 acres of land.
Two U.S. Supreme Court cases in 1986 seem applicable: Nolan et al. vs. California Coastal Commission, and the other concerning a church group in Los Angeles County. Both seem to require payment for such “taking” of property.
A: I bounced this off a lawyer specializing in real estate law (which, incidentally, is also going to have to be your first order of business, too), and he was pretty impressed with your research.
Like a lot of court decisions involving real estate--or dog leash requirements, for that matter--interpretation is the name of the game. Having a couple of court decisions apparently supporting your argument is great, psychologically, but it still doesn’t mean clear sailing.
To simplify it as much as possible, here’s how the lawyer interpreted the meaning of those two decisions: To require the signing over of property without compensation, he said, the city or county must establish a clear and rational connection between what it intends to do with the property and how your proposed use of it would be incompatible. In the absence of such a connection--the city, for instance, simply wants it because, at some vague time in the future, it might want to widen the road, and your development of it would make this impossible--then the property owner must be compensated.
However, as I’m sure you know only too well, this apparent applicability in your case is a long, long way from being as good as money in the bank. Get yourself a good lawyer.
