The Access Equity Module estimates how much equity a client might be able to access by refinancing their mortgage. This can help clients finance renovations, purchase an investment property, or achieve other financial goals.
Here's a step-by-step breakdown of how it works:
1. Eligibility Check: In a refinance, the maximum mortgage amount cannot exceed 80% of the property’s value. This establishes the upper limit for what the client can borrow. To evaluate whether refinancing is feasible, Ownwell also calculates the prepayment penalties for breaking the existing mortgage. These penalties are added to the current mortgage balance to determine the minimum loan amount the client would need to cover their obligations.
2. Maximum Refinance Amount Estimate: Ownwell estimates the maximum refinance amount a client might qualify for, taking into account:
The client’s home equity.
Their income and debt payments.
Housing expenses (e.g., property taxes, heating, and condo fees).
Maximum GDS (Gross Debt Service) and TDS (Total Debt Service) ratios, set to 39% and 44%, respectively.
3. Finding the Best Rate: Ownwell searches Lender Spotlight to identify the lowest available rate for the maximum refinance amount determined in the previous step. The search factors include:
The client’s income.
Their credit score, debt payments, and LTV (loan-to-value ratio).
Important Note for Alt/B Clients
If the Client's Current Lender Is Determined To Be Alt/B: Ownwell infers if a lender is “Alt/B” based on its name in the “Current Mortgage” section of the Client Details page. If we determine it’s Alt/B, Ownwell only considers Alt/B lenders for the Access Equity analysis.
If the Client's Current Lender Is a Bank, Monoline, or Credit Union: Ownwell does not restrict which lenders it considers. This means you’ll see the lowest rate available from all lender types.
4. Qualification Check: Using the rate identified in the previous step, Ownwell conducts a final qualification check with the stress test to confirm the client’s maximum refinance amount. This step ensures the client meets both income and LTV requirements.
5. Calculation of Available Equity: Finally, Ownwell determines the equity the client can access by subtracting:
The existing mortgage balance, and
The estimated prepayment penalties,
from the maximum refinance amount calculated in the previous step.
By combining these calculations, the Access Equity Module provides a clear estimate of the equity your clients could unlock through refinancing.