Accunet Mortgage & Realty Show 10-4-25

# Putting the Puzzle Pieces Together: Why Smart Mortgage Design Matters

When clients come to us with their home financing goals, they usually arrive with a clear picture in mind: “I want to borrow this amount” or “I need to refinance my current loan.” And that’s a great starting point. But here’s what we’ve learned after years of helping families navigate mortgages—the first idea isn’t always the best solution.

The real value comes from asking better questions and designing a strategy that works for your specific situation.

## Begin With the End in Mind

Recently, a client contacted us about purchasing a $1.5 million home on the North Shore. They had $300,000 ready for the down payment and wanted to borrow $1.2 million. Simple, right?

Not quite. As we talked through their full situation, we learned they had significant equity in their current home, which they’d sell after moving into the new property. They also had good—but not great—credit scores around 740.

Here’s where mortgage design matters: a $1.2 million jumbo loan with that credit profile would have meant an interest rate north of 7%. But by thinking through the complete picture, we found a better path.

We helped them take a second mortgage on their current home to free up equity, then combined that with their cash savings for a larger down payment on the new house. This brought their loan amount under the conforming limit of $806,500, where Fannie Mae and Freddie Mac offer better pricing. The result? A rate in the mid-5% range with no loan costs—and they’d already planned to pay off both mortgages when their old house sold anyway.

Same goal. Same end result. Dramatically different monthly payment.

## When Family Wants to Help

Buying a home from family members comes with its own unique challenges. Parents and grandparents naturally want to give their children a good deal, but without proper guidance, generosity can sometimes work against everyone’s best interests.

We recently worked with a family where the parents planned to sell their home to their children for $400,000—well below the $500,000 market value. They were worried about gift tax implications and had carefully calculated a $72,000 gift of equity to stay within annual limits.

But here’s what most people don’t realize: structuring the sale at market value actually creates better loan terms for the buyers. Fannie Mae and Freddie Mac reward larger down payments with better pricing, and credit scores matter less when you’re putting 40% down instead of 20%.

The gift of equity works exactly the same either way—it’s just structured differently on paper. And for most families, the gift tax concern is overblown. Unless the parents have an estate worth over $30 million, they simply file an extra form with the IRS noting the gift against their lifetime exemption.

We connected the family with a qualified tax professional to confirm the approach, then structured the transaction to give the children better financing while the parents still provided the same generous gift. Everyone won.

## The Stealth Refinance Strategy

Mortgage rules change regularly, and staying current on those changes is how we help clients maximize their options. Recently, Fannie Mae and Freddie Mac updated their definition of a “no cash-out” refinance—the kind that gets better pricing than a traditional cash-out loan.

The new rule allows borrowers to receive the *greater* of $2,000 or 1% of the loan balance at closing while still qualifying for standard refinance rates. For a $400,000 loan, that’s $4,000 instead of the old $2,000 limit.