HELOC Case: Michelle and Mike Role You are Michelle and Mike @ You want to finish the basement in your home. You are very excited about this project because it will provide two additional bedrooms, a bathroom and a new family room for your growing family. The total cost of this project is $30,000. You recently applied for a $30,000 installment loan at your bank, but were declined because of the high amount of debt you currently have. Here are the details of your current situation. Feel free to share this information with the Financial Service Representative you are meeting today at CIBC. Home Value: $400,000 Current Mortgage Balance with ABC Bank: $168,000 Outstanding Loans: 19, 99 .1 - interestrates Balance Monthly Payment Visa $ 5,400 $150. (minimum amount) Car Loan 1 $16,000 $300 Car Loan 2 $ 9,000 $200 The Brick $ 6,600 $250 Income: Michelle $50,000 and Mike $40,000 Cash Flow Summary: $100 surplus each month. You are hopeful today's meeting will result in an approval for you to receive the $30,000 as the contractor has said he could begin the project next month. In terms of cash flow, you can handle all your current payments, and could increase your loan payments by another $100 each month. A good friend recently mentioned to you that he received a loan from his bank that allowed him to pay off all his other smaller loans, leaving him with a lower monthly payment! This doesn't seem possible, and you're not sure you should ask the FSR about that type of loan because you are afraid it would make you look foolish. Good luck! HELOC Case Michelle and Mike Role.docx/Client CommunicationsHELOC Case: FSR Role You are a Financial Services Representative (FSR) with CIBC. You are meeting today with Michelle and Mike. They are interested in speaking to you about a loan to finish the basement in their home. They are not clients and you haven't met them before. Gather the following information from them, and make a decision regarding whether they will qualify for the loan they desire. Also be sure you address these areas: a) Build rapport, and then ask "how can I help you today?" b) Calculate whether they will qualify for a HELOC ( circle: YES or NO ) If yes, what is the HELOC maximum they could qualify for: $ 152100 (show calcs) d) Calculate their monthly payment if they were to borrow enough from their HELOC to fund the basement project as well as pay off all their debt (other than mortgage). (N=10) e) Identify and communicate to Michelle and Mike the benefits of these actions. (list below) Data to Collect: Home Value: 400, 000 400, 000 - 168, 800 Current Mortgage Balance with ABC Bank: 168,000 Outstanding Loans: Loan Type Balance Monthly Payment VISa $5 , 400 $ 150 320, 000 Car Loan 1 $ 16,000 $ 300 16 8 0 10 Car Loan 2 $9000 $ 200 152, 200 The Brick $6,600 $250 $ 42, 400 $ 900 Income: Michelle $50,000 and Mike $40,000 Cash Flow Summary: (surplus/deficit) $ 100 72, 400 HELOC Calculations: Benefits of proceeding with the HELOC: 1. 2. 3. 4. HELOC Case FSR Role.docx/Client Communications 12
