Starting problem: A salaried dual-income household needed to refinance and consolidate high-interest consumer debt. Their own bank declined them: Total Debt Service ratio at 52% from the weight of minimum monthly debt payments.
What the lender saw: A Visa at $28,500 and 21.99% ($850/month minimum), a personal line of credit at $42,000 and 10.25% ($525/month interest-only), an auto loan at $24,500 and 8.99% ($610/month), and store cards at $5,000 and 28.99% ($180/month). Combined monthly debt drag: $2,165.
The structural move: I repackaged the application under an Insured/Equity Refinance Exception model, where paying out every one of those debts was made a mandatory condition of advance. The underwriter evaluates the post-funding reality, not the pre-funding snapshot. Post-funding TDS dropped to 31.5%.
Timing: 11 business days from first call to funded.
Result: Refinance approved and funded at $580,000 on a $950,000 property. That is a $100,000 equity take-out at 61% loan-to-value. Rate: 4.44% on a 3-year fixed. Monthly debt obligations fell from $2,165 to an incremental mortgage payment increase of just $680. Monthly cash flow savings: $1,485.